Clean Development?

Dietmar Mirkes Clean Development?

How Luxembourg is reducing its greenhouse gas emissions abroad.

KLIMABÜNDNIS LËTZ EB UERG ALLIANCE DU CLIMAT L UXEMBOU RG

Contents

Preface ...... 3

1. The Clean Development Mechanism 1.1. What are emission rights? ...... 4 1.2. Kyoto: aims and means ...... 4 1.3. Kyoto: aims and actual emissions ...... 6 1.4. The origins of emission credits ...... 7 1.5. How is the value of an emission credit calculated? ...... 7 1.6. The demand for emission credits in Europe and Luxembourg ...... 8 1.7. The current global CDM market ...... 10 1.8. How do CDM projects contribute to sustainable development? ...... 12

2. Luxembourg’s CDM-Projects

Published by: 2.1. The projects at a glance ...... 14 Action Solidarité Tiers Monde 2.2. Dams ...... 21 55, avenue de la Liberté 2.3. Sinks ...... 25 L-1931 Luxembourg 2.4. Electricity for a village in Nigeria ...... 28 Tél: 400 427-30 2.5. Landfi lls...... 29 Fax: 400 427-27 2.6. Power plant renewal in Azerbaijan ...... 32 web: www.astm.lu 2.7. Sibirian Gas ...... 35 2.8. A fresh southwind blows ...... 39 Written by Dietmar Mirkes 3. Conclusions Luxembourg, July 2009 3.1. The real impact our emission rights have on the climate ...... 42 3.2. And the outlook? ...... 45

This publication is co-fi nanced by the Euro- pean Commission (EuropeAid). The views expressed here are the sole responsiblity of ASTM and do not necessarly refl ect the views KLIMABÜNDNIS LËTZ EB UERG of the European Commission. ALLIANCE DU CLIMAT L UXEMBOU RG Preface

Dear Reader,

Each of us feels how the climate is changing. Everybody As climate policy now involves heavy use of specialist jar- in the media seems to be monitoring how fast the polar ice gon, the first part explains what emissions rights are and cap is melting, almost on a daily basis. And we all are chal- how the Clean Development Mechanism works, and all lenged to contribute more to solving this global problem. other important terms are used in context so that we as average citizens can better comprehend and classify and For many years, ASTM has joined in the tug-of-war bet- comment on Luxembourg’s overall situation. ween environment and development - we are accredited observers at the UN Climate Secretariat and coordinate the In the second and main part, we invite you on a small trip North-South activities of the Luxembourg Climate Alliance around the world, to a selection of the 79 projects, which (Klimabündnis Lëtzbuerg). With a 40 year track record, we in the meantime (supposedly) generate emission credits also believe we have a degree of experience in project evalu- for us. Here we deal intensively with the general rules of ation in developing countries. emissions trading.

The present study focuses on climate policy in Luxembourg And finally in the third part, we try to clarify what „our“ on the occasion of national and European elections in June world-wide projects really bring to the fight against climate 2009, but it also serves as a case study for how EU member change, and if this is a sustainable path, or is rather a dead states are tackling their objectives at the national level. end. Review international, European and national policy and you will soon notice the fact that Luxembourg has a very Dietmar Mirkes, ASTM particular kind of climate change policy: our country is on its way to achieving its reduction target entirely through the purchase of so-called emission rights. The Kyoto Pro- tocol explicitly provides such loopholes - but it should not be possible for a country to slip through them completely. And almost all of us contribute, because the Kyoto Cent tax we pay when we fill up our fuel tanks, in turn fills the Kyoto Fund, from which these rights can be paid.

For a country like Luxembourg, which is internationally renowned for its active development policy, it might seem likely it would be just as agile in international climate policy. And so it has aroused our curiosity to understand what „our“ real world-wide activities are and to what degree they are ultimately combating climate change.

3 1. Clean Development Mechanism

1.1. What are emission rights? le, methane makes an approximately 23 times greater contribution to global warming than carbon dioxide, therefore If you want to understand international climate policy there a tonne of methane is equivalent to 23 tonnes of carbon is no getting around the term „emission rights“. Emission dioxide. A tonne of carbon dioxide also occupies a physi- rights are a key element of the Kyoto Protocol. They allow cal space equivalent to the volume of an average 25-meter their owners to burden the atmosphere with greenhouse pool. If you have a car which emits CO2 at 125 g/km, after gases, and they are counted in tonnes of carbon dioxide. running for 8,000 kilometres it will have emitted a tonne So that all the different greenhouse gases can be compared of carbon dioxide. and offset against one another, they are converted accor- The monetary value of one tonne of carbon dioxide varies ding to how harmful they are to the climate into so-called - depending on where and when it is trade - between EUR equivalent carbon dioxide (shortened to CO2e). For examp- 1 and EUR 30. Luxembourg has purchased emission rights at EUR 4 per tonne, but also others at around EUR 12 per tonne. Often such purchased emission rights or allowances are referred to as „credits“. This notion has been widely established - the Kyoto world speaks English - and so for the sake of simplicity when we speak of „credits“ in the remainder of the text, we mean “purchased emission rights over a tonne of carbon dioxide equivalent“. So if you have acquired an emission credit in the value of one tonne of CO2 emissions, this country may blow one more tonne of CO2 bubbles into the air, for example, by driving a car a further 8000 km. The acquired right to emit a tonne is a purely arithmetical calculation, the net effect on the global climate balance sheet is equal to zero.

1.2. Kyoto: Aims and Means In 1997 in Kyoto, Japan, 141 signatory countries to the Kyoto Protocol agreed to reduce global emissions of greenhouse gases. Industrialised countries committed to reduce their greenhouse gas emissions on average for the years 2008-2012 to at least 5.2 percent below 1990 levels. Deve- loping countries have no such obligation because their per capita emissions are much lower and their contribution to

Illustration: CSE India climate change has been very small (about 15%).

4 1. Clean Development Mechanism 1. Clean Development Mechanism

Within the industrialised countries the 15 then EU countries committed to a reduction target of minus 8%, which Article 12 of the Kyoto Protocol is called the „EU Bubble.“ Within this EU bubble, the 15 member states have different objectives. Luxembourg has 1. A clean development mechanism is hereby defined. the highest goal set at minus 28%. The Grand Duchy of 2. The purpose of the clean development mechanism Luxembourg has, however, by far the highest per capi- shall be to assist Parties not included in Annex I in ta emissions in the EU and all industrialised countries, achieving sustainable development and in contributing emitting around 25 tonnes of CO2 per year. Within the EU to the ultimate objective of the Convention, and to as- bubble, the reduction is shared between a clearly defined sist Parties included in Annex I in achieving compliance number of large businesses and the member states. We fo- with their quantified emission limitation and reduction cus hereafter only on the state share. commitments under Article 3. The Kyoto Protocol in 1997 only came about because the United States (under the Environment Minister of the day, Al Gore) imposed a condition that developed countries and businesses that did not achieve their climate change nerate such emission credits. Such CDM projects should objectives could fall back on so-called „flexible mechanis- not only initially help industrialised countries meet their ms“. This system allows for ‘sponsoring’ climate protection reduction targets at the lowest possible cost, but also pro- projects in developing countries (Clean Development Me- mote sustainable development in host developing coun- chanism projects, or: CDM) or in the former Eastern Bloc tries (see box). What is „sustainable“ is defined by the host countries (Joint Implementation projects, or: JI) and coun- countries themselves. ting the resulting greenhouse gas reductions as emission The option of falling back on emission rights from CDM credits for their own reduction targets. and JI projects is restricted from the outset in the Kyoto Proponents of flexible mechanisms argue that in climate Protocol. Article 6 d) of the Protocol states as a conditi- terms it doesn’t matter where on the globe emissions sa- on that „The acquisition of emission reduction units shall vings come from. The system would, however, allow coun- be supplemental to domestic actions for the purposes of tries and companies to shop for and/or generate emission meeting commitments under Article 3.“ How much more rights or credits where it was cheapest to do so. This was „supplemental“ means, however, is not quantified any- the birth of greenhouse gas emissions trading, which from where, not even in the practical rules for CDM projects the outset critics designated a „loophole“ in the Kyoto pro- established in the autumn of 2001 at the 7th Climate Con- tocol. ference in Marrakech. Emission rights can only be used by countries and companies that are committed to reduction targets (the so-called Annex I countries). Developing countries cannot therefore acquire such rights, but serve instead as host countries for Clean Development Mechanism (CDM) projects, which ge-

5 1. Clean Development Mechanism

crease of 1.3%. However, this was simply because in the states of the former Soviet bloc, industry collapsed in the 90s and emissions reduced 38.3% (Down To Earth, 2008). The same picture emerges in the European Union, which is often portrayed as a global pioneer in climate protection. The emissions of its 25 member states (excluding the two new members Romania and Bulgaria) decreased between 1990 and 2005 by 1.5%, but only because emissions from the new member states from the former Eastern bloc fell drastically during the 90s. From 2000 to 2005 emissions by the EU-25 increased in total by 1.4%, because the economies of new members recovered (UNFCCC, 2007). The atmosphere is filled with more and more greenhouse gases: current concentration is about 380 millionths by volume share (parts per million, ppm) and rising each year by 2 ppm, with developed and developing countries currently contributing in equal proportions to this increase (UNDP, 2007). The Intergovernmental Panel on Climate Change (IPCC) estimates that, from a concentration of 450ppm, the damage to the atmosphere will become irrevocable (IPCC, 2007). There is very little space left to reach this critical mark - about 70 ppm - and at the present rate of The UN Climate Conference in Bali, December 2007.

Illustration: Thomas Brose / Climate Alliance International emissions it will be used up in 35 years. The core issue of international climate policy today is: who owns the remaining room in the atmosphere? 1.3. Kyoto: goals and actual Currently, international negotiations seek a successor ag- emissions reement in which precisely this question is central. Pre- vious discussions at the climate summits of 2007 in Bali Look now at real greenhouse gas emissions since 1990, and 2008 in Poznan were a sobering failure, in the face of then rub your eyes in astonishment: western industrial rising emissions and lack of agreement around industriali- countries’ emissions increased by 14.5% between 1990 sed country consumption levels. The outlook on the next and 2006 – just as they would have if there had been no climate summit in Copenhagen in December 2009, to lay Kyoto Protocol (of course, emissions by the United States the groundwork for a Kyoto follow up agreement, is conse- have contributed significantly to this rise). All industria- quently pessimistic. lised countries during this period achieved an overall de-

6 1. Clean Development Mechanism 1. Clean Development Mechanism

1.4. The origins of emission cre- Consultancy firms play the main roles in this multi-stage dits process. They often operate in several of these functions and use their expertise in emissions trading. They are cho- A company in a developing country that would like to ini- sen and paid by the project operator, which in practice (as tiate a CDM project - the project operator - usually tasks a we shall see) often leads to misconceptions about the local consultancy firm that specialises in the CDM procedures population’s acceptance of the project. There is nothing in with the project design, which involves putting together the CDM procedures that amounts to „neutral“ external the Project Design Document (PDD) (This central do- monitoring. cument of each CDM project can be found on the CDM website http://cdm.unfccc.int/index.html and inputting 1.5. How is the value of an emis- the project name). Then the project operator requests the approval of the national CDM authority. This authority ex- sion credit calculated? amines in particular the environmental and social benefits The calculation of how much greenhouse gases a project of the project (though they tend to rely on the information saves provides the ecological and economic core of each given by the consultancy firm) and approves it. The pro- project. For example, conventional electricity is composed ject operator then contracts another consulting firm (a so- of a mix of coal, nuclear, water and a little wind generated called,Designated Operational Entity/DOE) to validate the energy, and, on average, the production of 1 kilowatt-hour project, i.e. to verify that the project complies with interna- results in about 700 grams of carbon dioxide escaping into tional CDM rules, and to submit the project for approval by the CDM Executive Board of the Secretariat of the United Nations Framework Convention on Climate Change. These DOEs are a small number of mostly global consulting firms such as PricewaterhouseCoopers or Det Norske Veritas. They occupy the key position in the whole process. If the project is approved by the CDM Executive Board of the UN, it can go ahead. It is thus possible for the operating company to cut down on greenhouse gas emissions in comparison to using conventional methods in the region and in doing so generate emission rights. The emission rights are verified and certified (audited) by a consultant who reports to the CDM Executive Board. Once the certified emission rights have been accepted the project operator is able to sell these rights as certified emission credits (Certified Emission Reduction units / CER) - in Kyoto

speak simply „credits“. Illustration: ASTM

7 1. Clean Development Mechanism

the air. Electricity, which originates exclusively from a new of trees which only temporarily bind carbon dioxide, see hydroelectric power plant, produces no carbon dioxide. If section 2.3 Sinks). For each CDM project, the difference this electricity is fed into the grid, it replaces - the assump- between its emissions and those of the usual energy source tion - the same amount of conventional electricity, thus in the project region (e.g. electricity) is calculated using saving 700g carbon dioxide per kilowatt-hour. This is the defined methodologies; this calculation yields the project’s „environmental additionality“ of this new dam, its contri- certified emission reduction units, the „credits“. bution to the reduction of greenhouse gases. A second prerequisite for the recognition of the credits is Here one must also note that, of course, no coal-fired power that the project would not have gone ahead anyway (so- plant is closed a result, therefore the power it produces is called „Anyway-projects“); the project must be feasible and not really „replaced“. With globally rising energy demand, profitable only as a result of the sale of credits. Later we will supply from renewable energy sources is only increasing look in more detail at some concrete examples of dams and for new electricity. Not a single CDM project has destroyed such „economic additionality“. existing carbon dioxide in the atmosphere (this is true also 1.6. The demand for emission credits in Europe and Luxem- bourg up to 2012 and 2020

In order to claim a global leadership role beyond the end of the Kyoto Treaty, in January 2008 the EU Commission published its proposals on how the European Union would reduce greenhouse gases by at least 20% compared to 1990 levels, and, by 2020, increase to 20% the share of renewable energies in the consumption mix. The proposals were based on member states’ own forecasts in November 2007. (see p. 10, source: European Commission, 2008) In addition, the 15 EU states as a group committed themselves to reducing emissions 8% below 1990 levels by 2010 or as an average for the years 2008 to 2012. The group assumed that 3% of the 8% reduction – or, more than a third – would be achieved through the „application of the Kyoto mechanisms“. Also, they estimated the existence of 1.4% CO2 storage capacity in their forests, a figure which the EU The Clean Development Mechanism has not brought about the closure of a single coal- Commission publicly doubts the validity of (see chapter 2.3 fired power plant.

Illustration: flickr Sinks). Furthermore, the belief amongst EU member states

8 1. Clean Development Mechanism 1. Clean Development Mechanism

already in November 2007 that their own climate change measures would not deliver even half of the reduction target (only 3.6% of 8%) was silent acknowledgement that the EU was not leading anybody. Luxembourg has conceded, however, that its target of a 28% emissions reduction would not be achieved; average emissions for the years 2008 - 2012 is even expected to be 3% above the 1990 base year level. This would mean the Grand Duchy missing its target by 31%. It has assumed however that it can compensate for missing its target by purchasing emission rights to attain the 30% reduction, leaving the remaining 1% to be accomplish with domestic efforts. The Luxembourgish strategy - like that of the Dutch – sees in the Kyoto Protocol an agreement to reduce emissions entirely through the purchase of emission rights. Be- hind this lies an economic calculation that these credits can be purchased abroad more cheaply than if we had to realise any actual reductions in this country. This is clearly Private transport is a big contributor to Luxembourg’s climate footprint. contrary to the aforementioned article 6. d) of the Kyoto Illustration: ASTM Protocol, which states the purchase of emission rights shall only be „supplemental“ to domestic measures. The government has been funding these purchases by doubling car tax against the general sense of the Kyoto Protocol and the from 1st January 2007 and gradually increasing taxes on Framework Convention on Climate Change, as these state fuels. This money feeds into the newly created Kyoto Fund that it is the duty of industrialised countries to start redu- for this purpose. cing their greenhouse gas emissions. However, this is a stance that is neither applicable to all The EU‘s proposal of January 2008 concerning the Kyoto nor is it morally defensible. What would happen if all EU or follow-up period from 2013 to 2020 suggests that in order developed countries instead of reducing domestic green- for EU member countries to attain their target they are en- house gases bought emission rights? Firstly, the impact on titled to buy credits equivalent to 3% of 2005 emissions ; the global climate would be zero, and secondly, developing some countries - including Luxembourg - may even buy up countries would not sign any further contracts with the to 4%. At first glance this appears to be a small amount but, more industrialised countries, because it is quite clearly in fact, the EU’s proposals enable two thirds of emissions the climate inputs from the industrialised countries that reductions to be met through the acquisition of emission contribute most to climate change. Luxembourg (and the rights (use of emissions trading in the non-ETS sector - up Netherlands) failed to have this stance adopted, which goes to 3% of 2005 base emissions accumulated up to 2020).

9 1. Clean Development Mechanism Projected emissions in 2010 With existing Use of Kyoto Use of carbon Additional With all measures, Kyoto me- compared with base year policies and mechanisms sinks policies and chanisms and carbon sinks measures (Govt.) measures - Base Year (BY) Kyoto Projections for Effect in 2010 Effect in Effect in 2010 Projections Gaps between emissions targets 2010 2010 for 2010 projections and targets MtCO2 % of BY % of BY % of BY % of BY % of BY % of BY % of BY Austria 79,0 -13,0% 17,4% -11,4% -0,9% -18,4% -13,3% -0,3% Belgium 145,7 -7,5% -3,7% -4,8% 0,0% -8,5% -1,0% Bulgaria 132,6 -8,0% -29,8% -5,2% -34,9% -26,9% Cyprus 6,0 na 44,3% -2,9% 41,4% na Czech Republic 194,2 -8,0% -25,1% -0,6% -3,1% -28,8% -20,8% Denmark 69,3 -21,0% -2,2% -6,1% -3,3% 0,0% -11,6% 9,4% Estonia 42,6 -8,0% -62,8% -3,0% -65,7% -57,7% Finland 71,0 0,0% 19,7% -2,0% -0,8% -17,4% -0,6% -0,6% France 563,9 0,0% 0,8% -0,7% -4,3% -4,2% -4,2% Germany 1232,4 -21,0% -22,5% -0,4% -3,3% -26,2% -5,2% Greece 107,0 25,0% 23,9% -1,1% -2,0% 20,8% -4,2% Hungary 115,4 -6,0% -24,9% -0,5% -25,4% -19,4% Ireland 55,6 13,0% 22,8% -6,5% -3,7% -0,2% 12,4% -0,6% Italy 516,9 -6,5% 7,5% -4,0% -4,9% -3,2% -4,6% 1,9% Latvia 25,9 -8,0% -46,1% 0,0% -46,1% -38,1% Lithuania 49,4 -8,0% -30,4% 0,0% -30,4% -22,4% Luxembourg 13,2 -28.0% 3,1% -29,9% -1,1% -28,0% 0,0% Malta 2,2 na 61,8% 0,0% 61,8% na Netherlands 213.0 -6,0% -2,2% -6,1% -0,1% 0,0% -8,4% -2,4% Poland 563,4 -6,0% -28,4% -0,5% 0,0% -29,0% -23,0% Portugal 60,1 27,0% 44,2% -9,6% -7,7% -4,0% 22,7% -4,3% Romania 278,2 -8,0% -31,4% -3,9% -35,3% -27,3% Slovakia 72,1 -8,0% -18,4% -3,2% -21,6% -13,6% Slovenia 20,4 -8,0% 6,7% -2,9% -8,3% -8,7% -13,2% -5,2% Spain 289,8 15,0% 52,0% -19,9% -2,0% -9,6% 20,5% 5,5% Sweden 72,2 4,0% -2,7% -3,0% 0,0% -5,7% -9,7% United Kingdom 776,3 -12,5% -19,4% -0,5% 0,0% -20,0% -7,5% EU-15 4265,5 -8,0% -3,6% -3,0% -1,4% -3,3% -11,3% -3,3% EU-27 5768,0 na -10,1% -2,2% -1,1% -3,0% -16,3% na Source: European Commission Press Release 439-2008 (date: 16/10/2008)

10 1. Clean Development Mechanism 1. Clean Development Mechanism

In its press release “Climate change: Commission sets out to two specifi c objectives: proposals for global pact on climate change at Copenha- - That money for renewable energy would fl ow to the poo- gen” of 28th January 2009, the EU-Commission goes a rest countries. step further and proposes: “The EU should seek to build, - That the projects would promote sustainable develop- by 2015, an OECD-wide carbon market (...) The market ment in their regions. should be expanded to include major emerging economies by 2020 with a view to building a global carbon market.” 1,500 CDM projects and fi ve years later it can be said that (EU-Commission, 2009) neither aim was achieved - indeed they were completely missed. The fact is that the major emerging economies 1.7. The current global CDM have the largest part of the cake, and the least developed market After defi ning the rules of the game in the autumn of 2001 at the UN conference in Marrakech projects were formally developed and national CDM authorities created. On 28th November 2004 the CDM Board offi cially approved its fi rst project. From 2005 to date the world has experienced a ve- ritable „Carbon Bonanza.“ In early March 2006 there were 654 projects registered or in the validation stage, totalling an expected 836 million CER units by 2012. Today there are already 1572 projects (April 2009), generating 281.2 million credits per year. By the end of 2012 1.5 billion of such emission reduction units are projected to be in circulation. At an assumed average price of EUR 8 per unit, currently this represents an annual total of EUR 2.3 billion. UN Climate Change Secretariat data from 16.4.09 show that most CDM business is concentrated in the largest emerging economies: one third of projects are located in China, a good quarter in India. A look at the quantity of credits generated per country shows much more clearly the dominance of China, where 56% of all credits are generated, followed at some distance by India with 12%, Brazil - 7%, South Korea - 5% and Mexico - 3%.

At the Carbon Fair in Cologne, May 2008.

Originally, the clean development mechanism was linked Illustration: ASTM

11 1. Clean Development Mechanism

which only two examples are: 1) For projects that use biomass to generate electricity, the surrounding forests have been overexploited, so that fire- wood for the poorer inhabitants of the region was scarce and expensive. 2) In project reports, testimonies of villager satisfaction were copied and re-used in other projects verbatim (including spelling errors). The CSE concluded that CDM should actually be called “Cheap Development Mechanism”. (CSE, 2005). The broadest and best-known study was delivered to the German Öko-Institut in November, 2007 on behalf of the WWF from (Lambert Schneider / Öko-Institut, 2007). His conclusion in relation to sustainable development: „Pro- moting sustainable development through poverty alleviation or employment benefits and community seems to have been largely forgotten by project developers, the Verifier, and the CDM Executive Board.“ Experts at the CDM do not now disputed that the objec- Biomass projects have led to over-exploitation of surrounding forests.

Illustration: ASTM tive of promoting sustainable development in the project regions has largely been neglected. This is mainly due to the fact that the sustainable development component is countries and Africa as a continent only got a share of the not caught in the sale price, that it usually costs time and crumbs of the cake. We will return to this matter in the last money, rather than bringing money in. Well over half of all chapter. rights are based anyway on only three types of projects and involve the destruction of the greenhouse gases HCFC-23, 1.8. How do CDM projects nitrous oxide and methane produced in chemical factories and coal mines - without any lasting effect on the envi- contribute to sustainable ronment outside the factory gates (Mirkes, 2006). Many development? known sinks projects even lead to the impoverishment of the local population (see section 2.3 Sinks). In 2005, the Centre for Science and Environment in New The so-called „Gold Standard“ projects, which stand out Delhi (CSE) assessed Indian CDM projects for their con- for their stricter criteria of environmental and social com- tributions to sustainable development in the regions con- patibility compared to the mass of CDM projects, unfortu- cerned and came to some very sobering conclusions – of nately, constitute such a small „fair trade niche“ that they

12 1. Clean Development Mechanism 1. Clean Development Mechanism

do not impact the overall CDM market. In the replies of the Luxembourg, Luxembourg, 18.7.2006, www.environnement.public.lu - Mirkes, Dietmar : Dossier „Was tragen CDM-Projekte zur nachhaltigen Luxembourg Government to Parliamentary questions not Entwicklung bei ?“, in : brennpunkt 3.Welt Nr. 232, Nov. 2006 a single Gold Standard project is mentioned. - Schneider, Lambert / Öko-Institut: Is the CDM fulfilling its environmen- The whole question of what contribution CDM projects tal and sustainable development objectives? An evaluation of the CDM and options for improvement. Report prepared for WWF, Berlin, Nov. 2007 make to sustainable development can therefore be consi- - Umweltbundesamt/ Deutsche Emissionshandelsstelle: Emissionshan- dered as no longer relevant for evaluating Luxembourg’s del, in: www.dehst.de/cln_090/nn_476494/DE/Register/Emissionsberech- CDM projects. We are much more interested now in kno- tigungen/Emissionszertifikate - United Nations Development Program (UNDP): Human Development wing what the contribution is of projects which generate Report 2007/2008. Fighting Climate Change: Human solidarity in a divi- our emission rights - do they actually help combat climate ded world, New York 2007 change or not? This core issue can be divided into two sub- - UNFCCC: homepages - www.unfccc.int and http://cdm.unfccc.int/index. html issues: are „our“ projects really „additional“? And, how much do our projects promote long-term structural change - away from fossil fuels towards renewable energies? First, we provide an overview of all the projects that generate credits for Luxembourg.

Sources:

- Centre for Science and Environment (ed.): What‘s CDM about? in: DownToEarth, 15 Nov. 2005, New Delhi, 2005, www.cseindia.org - Centre for Science and Environment / CSE (eds): Down To Earth, Cli- mate Change Special Dec. 2008 - EU-Commission, 2009: Climate change: Commission sets out proposals for global pact on climate change at Copenhagen, IP/09/141, http://europa.eu/rapid/searchAction.do - Europäische Kommission Vertretung in Luxemburg : Prognosen zum Klimaschutz : EU auf dem Weg zur Umsetzung der Ziele von Kyoto, Pres- semitteilung v. 439-2008 v. 16.10.2008 - Europäische Kommission Vertretung in Luxemburg : Vorschläge der Europäischen Kommission für ein globales Klimaschutzabkommen in Kopenhagen, 28.1.09 - European Environment Agency (Ed.): Greenhouse gas emission trends and projections in Europe 2008, EEA Report No. 5 / 2008, Copenhagen 2008 - Intergovernmental Panel on Climate Change (IPCC): Climate Change 2007 - IPCC Fourth Assessment Report, Geneva 2007 - Luxembourg Environment Ministry: - Changement climatique: Agir pour un défi majeur! - 1er plan d‘action en vue de la réduction de emission of CO2, Luxembourg, April 2006, www.environnement.public.lu/ - Luxembourg Environment Ministry: 2. Plan National d‘Allocation du

13 2. Luxembourg’s CDM projects

2.1 The projects at a glance 50 million. Luxembourg has a EUR 10 million share (20% of the fund) and this generates 29% of Luxembourg’s total All governments like advertising their achievements. Our credits. expectation that the government would proudly let us access a website of a map covered in little flags giving an 3. The Asian Pacific Carbon Fund of the Asian Develop- overview of our global climate projects has however been ment Bank has capital of $ 151.8 million. Luxembourg has bitterly disappointed. On the contrary, the search for the a $ 15 million share (9.88% of the fund) and this generates projects is more akin to a game of hide-and-seek. Only 4% of Luxembourg’s total credits. when the government must respond - to Parliamentary questions - they are for disclosure and this single disclosu- 4. The BioCarbon Fund of the World Bank (first tran- re must be then be pieced together into an overall picture. che) has capital of $ 53.8 million. Luxembourg has a $ 5 Therefore, the following is based primarily on analysis of million share (9.3% of the fund) and this generates 8% of the responses of the government to three parliamentary Luxembourg’s total credits. questions from the year 2008, also of the 2nd Allocation Plan and of Luxembourg’s projections on behalf of the EU. 5. The Community Development Carbon Fund of the In answers to parliamentary questions, the government World Bank has capital of $ 126.6 million. Luxembourg has has sometimes been quite detailed, though the complexi- a $ 10 million share (7.77% of the fund) and this generates ty of the emissions trading business by its nature imposes 12% of Luxembourg’s total credits. certain constraints. Emissions rights are acquired both through the direct purchase of rights from individual pro- 6. In addition, Luxembourg has a contract with Swiss Re jects and, for the most part, through purchasing shares in Global Markets Limited to purchase 1.624 million CERs funds. Luxembourg has participated in one single project, from two Chinese wind farms (no price available), which a landfill in El Salvador (and this was also reported in the corresponds to 31% of Luxembourg’s total credits. press). All other rights are taken from five large funds and indi- (See the projects at a glance, from page 15) vidual funds in which Luxembourg has acquired different proportions: The funds are constantly busy with purchasing rights from projects and communicating to their shareholders what 1. The Multilateral Carbon Credit Fund of the EBRD has stage the rights have reached. There are two important capital of EUR 150 million. Luxembourg has a EUR 10 mil- stages: lion share (6.67% of the fund) and this generates 10% of Luxembourg’s total credits. 1. PIN (Project Idea Notes): There are still no concrete sales, but the fund provides the buyer (eg Luxembourg) with de- 2. The Carbon Fund for Europe of the European Invest- scriptions of the projects which it is negotiating purchases ment Bank (EIB) and the World Bank has capital of EUR from (including, probable amount of emission rights).

14 2. Luxembourg’s CDM projects 2. Luxembourg’s CDM projects

2. ERPAs (Emission Reduction Procurement Agreements): these cover the sale of specifi c quantities of emission rights from certain projects.

Often the projects themselves are not yet registered by the UNFCCC as CDM or JI projects, but only stuck somewhere in the queue of the rather lengthy approval process. Again, there is a risk that projects that were actually planned, are ultimately not granted, or of resistance from the local population and therefore fail to comply with the timetable. Here it is assumed that all projects mentioned are granted and all project ideas are realised to their planned extent, such that concrete sales develop, since they represent the „shopping needs“ of our government and are essential un- derstanding government climate policy. (To classify certain PINs as „unrealistic“ is not within our means, and so they cannot be excluded from our analysis.) Since funds - with the exception of the World Bank’s Bio- Carbon Fund, the only one exclusively concerned with sink projects - treat projects across various sectors together, the A prospectus for the Carbon Fund for Europe. next step is to break the fund up into its component projects and determine each project’s weight within the fund and what share Luxembourg has of each project – then down as follows: the projects are regrouped according to the technologies - 94% come from Funds, only 6% from individual projects involved (called „methodologies“ in the UN-registration - 87% from the CDM, 13% from AAUs and JI projects. procedure). It is not possible to list all the projects here, many do not yet appear in the CDM pipeline, there are no Joint Implementation projects are located in the states of descriptions of projects and the funds’ websites are not par- the former Soviet bloc that do not belong to the EU, e.g. ticularly informative. Some project cycles also extend until, Russia and Ukraine. For simplicity’s sake, we include their for example 2017, so that only an unspecifi ed share falls reduction units, called ERUs (Emission Reduction Units), in the period to 2012. With all these caveats, the following in the concept of „credits“. picture emerges: AAU projects are projects in industrialised countries, which Luxembourg has so far acquired (or agreed to acquire) have signed the Kyoto Protocol and therefore have recei- shares from the funds and rights from individual projects ved a certain sum of emission rights, so-called Assigned totalling approximately 5.3 million tons of CO2. This breaks Amount Units. They can trade these rights among them-

15 2. Luxembourg’s CDM projects

funds were available. Of the total of 79 projects, let us look more closely at eight projects, which cover the main technologies and funds. It is not - as we have said – the contribution of the projects towards sustainable development of the host country that concerns us anymore, but whether they are actually „additional“ and whether they contribute to long-term structural change away from fossil fuels. After all, we want to know what Luxembourg’s contribution is, in the final analysis, to fighting global climate change.

Sources:

- Lux, Lucien / Environment Minister: Answer to Parliamentary Questi- on No. 2418 of 26.3.08 from Deputy Eugène Berger, Luxembourg 9.5.08, www.chd.lu - Lux, Lucien / Environment Minister: Answer to Parliamentary Questi- on No. 2722 of 24.7.08 from Deputy Camille Gira, Luxembourg 28.8.08, www.chd.lu - Lux, Lucien / Environment Minister: Answer to Parliamentary Question The Luxembourg Environment Ministry is responsible for CDM purchases.

Illustration: ASTM No. 3010 of 2.12.08 from Deouty Camille Gira, Luxembourg 24.12.08, www.chd.lu

selves; the states of the former Soviet bloc, which are now EU members are currently selling AAU rights. Luxembourg has applied for such rights from projects in Bulgaria and Romania. In the 2nd National Allocation Plan for Luxembourg, 23.5 million tons of emission rights could be purchased – which is adequately covered by the Kyoto Fund. The plan says the following mix should be aimed for: ± 50% CDM, 20-25% JI and 20-25% AAUs. Indeed, according to a statement in December 2008, 87% of Luxembourg’s credits come from the CDM and only 13% come from AAU and JI projects together. This massive slippage is thought to be primarily because CDM projects are developed faster and their rights come to market faster - and are usually cheaper - and the

16 2. Luxembourg’s CDM projects 2. Luxembourg’s CDM projects

The Projects at a Glance

Individual project Project Type Total Lux. Share (tCO2e) (tCO2e) El Salvador: Nejapa Landfill Project in El Salvador CDM 1 400 000 325 000 1 400 000 325 000

Carbon Fund for Europe (EIB & WorldBank): €50m capital Project Type Total Lux. Share Luxembourg’s share: €10m (20%) (tCO2e) (tCO2e) Egypt: Landfilling and processing services-Cairo CDM 325 000 65 000 Jordanian: Amman Landfill Gas CDM 900 000 180 000 Malaysian: Kota Kinabalu Composting Project CDM 340 000 68 000 Russia: Associated Gas Recovery Project JI 1 500 000 300 000 Uzbekistan: Uzbekneftegaz Associated Gas Project CDM 325 000 65 000 China: Beijao Waste Heat Recovery Project CDM 550 000 110 000 Columbia: Cartagena integrated mass transport system CDM 275 000 55 000 Nigeria: Lagos Solid Waste Project CDM 334 000 66 800 Nigeria: Kaji Hydra Rehabilitation CDM 900 000 180 000 Thailand: Small Scale Livestock Waste Management Project CDM 426 000 85 200 Uzbekistan: Tashkent Combined Cycle Power Plant CDM 700 000 140 000 Russia: Ulyanovsk Landfill Gas Flaring and Treatment Project JI 340 000 68 000 Russia: LPG flaring reduction project JI 620 000 124 000 Philippines: EDSA Bus Dispatch and Tracking Project CDM 184 000 36 800 7 719 000 1 543 800 CDM: Clean Development Mechanism JI: Joint Implementation AAU: Assigned Amount Units

17 2. Luxembourg’s CDM projects

EBRD Multilateral Carbon Credit Fund: €150m capital Project Type Total Lux. Share Luxembourg’s share: 10 Mio € (6.67%) (tCO2e) (tCO2e) Azerbaijan: Power Plant Rehabilitation Project CDM 4 500 000 300 150 Armenia: Small Scale Hydro Power Project CDM 138 870 9 263 Georgia: Rehabilitation of Hydro Power Plant CDM 432 000 28 814 Bulgaria: Kavama Wind Power Park AAU 872 000 58 162 Romania: Baeau Solid Waste Management AAU 177 000 11 806 Romania: Mireasa Wind Park AAU 250 000 16 675 Romania: Methane Capture and Energy Production at GIina Waste Water Treatment AAU 122 000 8 137 Russia: Reconstruction of Perm CHPP using combined Cycle Technology JI 380 000 25 346 Ukraine: Turbine expansion power plants JI 568 000 37 886 Ukraine: Ivano-Frankivsk Cement JI 406 000 27 080 7 845 870 523 320

Asian Pacific Carbon Fund of the Asian Development Bank: $151.8m Project Type Total Lux. Share Luxembourg’s share: 15m (9.88 %) (tCO2e) (tCO2e) China: Erlongshan Hydropower CDM 294 000 29 047 India: Tata Power Wind Energy CDM 180 000 17 784 Indonesia: Gikoko Palemban - LFG Flaring CDM 140 000 13 832 India: Timarpur-Okhla Waste Management CDM 163 000 16 104 China: Agricultural Waste CDM 150 000 14 820 China: Shandong Landtills CDM 12 000 1 186 China: Baoding Geothermal Project CDM 298 000 29 442 Thailand: Biomass Power Plant CDM 367 000 36 260 China: Tangeun Hydropower Project CDM 66 000 6 521 India: Mawana Sugars CDM 308 000 30 430 Fiji: Kinoya Biogas Project CDM 40 000 3 952 Pakistan: Wind Power Project in Sindh Province CDM 3 952 2 278 000 225 066

18 2. Luxembourg’s CDM projects 2. Luxembourg’s CDM projects

Community Development Carbon Fund der WeltBank: Kapital: 126,6 Mio $. Project Type Total Lux. Share Davon Luxemburg: 10 Mio $ (7,77 %). (tCO2e) (tCO2e) Argentina: Olavarria Landfill Gas Recovery CDM 131 000 10179 China: Guangrun Hydropower Project CDM 485 000 37685 Guyana: Skeldon Bagasse Cogeneration CDM 165 000 12821 Honduras: La Esperanza Hydro CDM 310 000 24087 India: Vertical Shalf Brick Kihn Cluster CDM 396 000 30769 India: FaL-G Brick and Block: Micro Industrial Plants CDM 600 000 46620 Moldavia: Biomass Heating and Energy Conservation CDM 348 000 27040 Nepal: Biogas Program CDM 1 000 000 77700 Peru: Santa Rosa Bund1cd Small Hydro CDM 88 000 6838 Philippines: Laguna De Bay Community Waste Management CDM 344 000 26729 Argentina: Salta LandfiIlGas Capture Project1 CDM 60 000 4662 Bangladesh: Installation of Solar Home Systems1 CDM 192 000 14918 and CDM 372 000 28904 Bolivia: Urban Wastewater Methane Gas Capture1 CDM 200 000 15540 China: Hubei Ecofarming Biogas1 CDM 370 000 28749 Columbia: Rio Frio Waste Management1 CDM 250 000 19425 China: Shandong Poultry Manure Biogas1 CDM 465 000 36131 Columbia: Furatena Energy Efficiency Project1 CDM 60 000 4662 Georgia: Small Hydro Rehabilitation1 CDM 114 000 8858 Kenya: Olkaira 1 Geothermal Expansion1 CDM 700 000 54390 Kenya: Redevelopement of Tana Power Station1 CDM 186 000 14452 Nepal: Micro Hydro Project1 CDM 191 000 14841 Nigeria: Aba Cogeneration1 CDM 732 000 56876 Uganda: Expand existing sugar crushing and cogen plant1 CDM 342 000 26573 8 101 000 629 448

(1) Project which has not yet been officially registered

19 2. Luxembourg’s CDM projects

BioCarbon Fund of the World Bank (1st Tranche): $53.8m capital Project Type Total Lux. Share Luxembourg’s share: $5m (9.3%) (tCO2e) (tCO2e) China: Facilating Reforestation for Guangxi Watershed Management CDM 462 000 42 966 Albania: Assisted Natural Regeneration CDM 257 000 23 901 Columbia: San Nicolas Agroforestry CDM 120 000 11 160 Columbia: Caribbean Savannah CDM 246 000 22 878 Costa Rica: Coopeagri Forestry CDM 557 940 51 888 Ethiopia: Humbo Assisted Regeneration CDM 165 000 15 345 Honduras: Pico Bonito Forest Restoration CDM 450 082 41 858 India: Improving Rural Livelihoods CDM 276 000 25 668 Kenya: Green BeIt Movement CDM 375 000 34875 Madagascar: Andasibe-Mantadia Biodiversity Corridor CDM 200 000 18 600 Mali: Senegal Plantation Project CDM 190 000 17 670 Moldavia: Soil Conservation CDM 600 000 55 800 Nicaragua: Precious Woods CDM 174 796 16 256 Niger: Acacia Community Plantations CDM 500 000 46 500 Philippines: Laguna de Bay Community Watershed Rehabilitation CDM 32 323 3 006 Uganda: Nile Basin Reforestation CDM 261 211 24 293 4 867 352 452 664

Swiss Re Global Markets Limited Project Type Total Lux. Share (tCO2e) (tCO2e) China: Liaoning Changtu Windfarm with 66 Turbines, 750 kW each CDM k. A. k. A. China: Guohua Inner Mongolia with 39 Turbines, 1250 kW each CDM k. A. k. A. 98 250 1 642 000

79 projects in total: 32 778 222 CO2e (84% CDM, 16% JI und AAU) Luxembourg’s share: 5 341 297 CO2e

20 2. Luxembourg’s CDM projects 2. Luxembourg’s CDM projects

2.2. Dams her, hydropower has long been a large part of electricity production in many Third World countries and is often the Ten of the 79 projects, which generate emission rights for norm. Maosheng Duan Ph.D. of Global Climate Change In- Luxembourg are dams. Together they account for four per- stitute at Tsinghua University notes that “Most of the CDM cent of all credits purchased by Luxembourg. projects hosted by China utilise domestic technologies and One of the main problems with dams as a producer of emis- do not involve an international technology transfer compo- sion rights is usually their lack of „additionality“. Green- nent.” (Maosheng Duan, 2008) house gas saving projects in developing countries can only be designated CDM projects, under the condition that they „La Esperanza“ - the hope would not have been built without the money from emissions trading. The projects must involve „additional“ efforts A project of the Community Development Carbon Fund, in to those which would have been applied anyway. This rule which Luxembourg is also financially involved, is the dam is intended to ensure that the money from emissions trading really goes towards „new“ CO2 savings. For many dams there are serious doubts as to whether they comply with this rule. The scientist Barbara Haya, in her dissertation “Failed Mechanism”, systematically investigated this issue (Haya, 2007). In reference to the „additionality“ of these projects, she says that in November 2007 over a third of the dam projects registered by CDM Executive Board, had already been completed at the time of registration and almost all the remainder were already under construction. On 1 November 2007 there were 654 worldwide dam projects in the CDM-queue, one quarter of all CDM projects worldwide. 402 of them were Chinese projects. Along side the „additionality“ stipulation, CDM project must also ensure that the technology is not „common practice“ in the target region. This rule is designed to ensure that CDM projects promote real technology transfers between industrialised and developing countries. For dams, however, the argument can hardly be based on technology transfer efforts. Hydroelectric power is not a new but rather an old, mature technology. There will be no transfer of Dams in China are increasingly financed through the CDM.

new renewable technologies to a developing country, rat- Illustration: flickr

21 2. Luxembourg’s CDM projects

„La Esperanza“, in the Central American republic of Hon- rakech (although CDM projects have been underway since duras. The construction dammed the waters of the river In- the year 2000). On 10 December 2001 the city of La Espe- tibuca and supplies nearby villages with electricity. On 4th ranza endorsed the project officially. Shortly thereafter, in August 2001, the company Consorcio de Inversiones S.A. February 2002, the construction work had already started. (CISA) and the power plant official representatives presen- The first turbine with a capacity of 485 kW went into ope- ted the La Esperanza dam project in the municipal town ration in June 2003, the second with 785 kW in June 2004. hall to the riparian communities. At this point there was On 21 January 2003, the consulting firm 2E Carbon Ac- no mention of „credits“ or the „Clean Development Me- cess / Ecosecurities filed a CDM Project Design Document chanism“ - the definitive rules of the mechanism were only concerning La Esperanza dam, including both the already specified and adopted in October/November 2001 in Mar- existing turbines along with those from the second phase of construction, which was to begin in June 2004 (2E Carbon Access, 2005). The validation company Det Norske Veritas was then hired to submit the project for certification by the CDM board at the UNFCCC secretariat (Det Norske Veritas, 2005). As for the criterion of „common practice“, there were serious doubts concerning La Esperanza dam. The validation company Det Norske Veritas wrote in their project report: “Privately financed, built and operated small hydro plants are not common practice in Honduras.“ The organisation International Rivers Network, noted, however, that in Honduras seven small privately owned hydropower plants were under construction or already in operation (CDM Watch, 2005). Despite these obvious shortcomings, after initial reluctance the UNFCCC-CDM board finally approved the project on 18.8.05. Yet many questions remain: for instance, how a hydroelectric plant, for which planning has already started and which has been presented in the project region, while the rules of the Clean Development Mechanism are not yet clear, be approved as “additional”.? How can the operator make anyone believe the power plant would not have been built without the CDM, when its first two turbines had already been delivering electricity for a year prior to being approved? A bird’s eye view of La Esperanza dam.

Illustration: google earth A similar picture emerges from the 50 MW Erlongshan hy-

22 2. Luxembourg’s CDM projects 2. Luxembourg’s CDM projects

droelectric plant in the Chinese province of Gansu, which generates credits for the Asian Pacific Carbon Fund. Its construction started in November 2004, it was registered with the Chinese CDM Authority in May 2005, then at the UN CDM Board in November 2006 and started operating in September 2007 (Det Norske Veritas, 2006, Gansu Zhan- gye Erlongshan, 2008). So, building had started half a year before being submitted to the CDM registry in China and two years before final recognition was attained from the UNFCCC CDM Executive Board. The two examples of „La Esperanza“ in Honduras and Er- longshan „in China, thus confirm the general statements of B. Haya on the dubious additionality of many CDM dams and suggest that a large portion of the circa 180,000 annual credits, the sum of all Luxembourg fund holdings from dams, are „fake” carbon credits which cannot offset Luxembourgs’ emissions.

Two further comments on environmental and Local populations often see their traditional rights to resources taken away. social acceptability Illustration: ASTM

CDM projects, according to the provisions of the Marrakesh Accords, must also promote environmentally and socially Residents, who live above the dam, often have their tradi- sustainable development in the target region. On the sub- tional fishing rights or access to the dam’s water to use for ject of social acceptability, and specifically the CDM-dams irrigation withdrawn because the operating companies as David Reyes investigated in Ecuador. For him the main pro- sole proprietors can have these transferred from the state blem are opaque decisions passed down on the inhabitants to themselves. For the residents below the dam the water of the water catchment area from on high, that the inha- flow will be affected, periodically changing the quantity of bitants then have to live with. Because agreements to sell available water and fish. As a result, for example, in Ecua- CDM credits are often signed long before the credits have dor, a movement has grown of people concerned about been generated, the pressure increases to realise a project CDM dams, who resist the withdrawal of their traditional within the planned period, and thus the willingness of ope- rights to use water (Reyes, 2008). rators to ignore possible protests by the local population Roberto Smeraldi, director of Friends of the Earth Brazil, against the project’s implementation (Acción Ecológica, moreover, pointed to a serious error in assessing the envi- 2007). ronmental impact of dams: the formation of methane from

23 2. Luxembourg’s CDM projects

Sources:

- 2E Carbon Access: La Esperanza Hydroelectric Project Honduras. Sim- plified Project Design Document for Small Scale Project Activities. Version 01 (21 January, 2003). Appendix, 8.8.2005.0 - Acción Ecológica (Hg.): Mecanismos de Desarrollo Limpio. Proyectos hidroeléctricos, otra forma de apropiación del agua. Serie Alerta verde, Nr. 149, Quito 2007. - CDM Watch (Hg.): The World Bank and the Carbon Market. Rhetoric and Reality, April 2005. - Det Norske Veritas: CDM Project Activity Registration and Validation Re- port Form, 2005. - Det Norske Veritas Certification Ltd.: CDM Project Activity Registration and Validation Report Form. Erlongshan Hydropower Project in Gansu Province, 22.8.06. - Gansu Zhangye Erlongshan hydropower Co. Ltd.: Monitoring Report on CER generated by EHC in 2007, Ver. 01, Jan. 03, 2008. - Haya, Barbara: Failed Mechanism. How the CDM is subsidizing hydro developers and harming the Kyoto Protocol, Berkeley 2007. - Maosheng Duan Ph.D., Global Climate Change Institute at Tsinghua University: The CDM Market in China: Developments and Challenges, in: Greenhouse Gas Market Report 2008, Hg. International Emissions Tra- ding Association (IETA). - Reyes, David / Acción Ecológica: Mecanismos de Desarrollo Limpio (MDL) y la Privación – Privatización del agua por hidroeléctricas, Quito 2008 (Internal Study). - Switkes, Glenn - Blog : If You Can‘t Stand the Heat..., 2.2.2009, in : http://internationalrivers.org/en/blog

Blasting for dam construction in China. Illustration: flickr

biomass in the flooded lake, which affects the CO2 balance is usually neither recorded nor taken account of. This can be especially significant in rainforest areas, reversing the balance from positive to negative (Switke, 2009).

24 2. Luxembourg’s CDM projects 2. Luxembourg’s CDM projects

2.3 Sinks

„Sinks“ are parts of the biosphere in which the carbon as carbon dioxide in the air, is temporarily or longer term „sunk“, i.e. it is bound, such as in oceans, soils and forests. Trees take in carbon dioxide and store carbon in their biomass, as long as they live. When they die and rot or when burnt, the stored carbon is wholly or mainly re- turned into the atmosphere as carbon dioxide or methane. So sinks bind carbon for a given period. But you cannot export the carbon we are “importing” into today‘s atmosphere through combusting petroleum, gas or coal back in geological time to the carbon age (300 million years ago). The Luxembourg government is committed to spending a total of EUR 5 million in the first tranche of the World Bank BioCarbon Fund at a price of $ 4.18 per tonne of CO2. The tranche amounts to a total of $ 53.8 million, with Luxembourg’s share equal to a 9.3% or roughly 1.2 million credits. According to the Government, as of 8th May 2008, the fund had completed specific purchasing agreements Fast growing eucalyptus trees are often used in sink projects.

with promoters in the amount of $ 20.4 million, i.e. 38% of Illustration: flickr the first tranche (Lux, 2008). Combined, these projects generate 4.87 million credits; the mended that “the offsetting of commitments of industria- Luxembourg share of 9.3%, therefore, equals 452,664 cre- lized countries [... using ...] projects aimed at enhancing dits. The government, however, speaks of 388,000 - the dif- sinks should be excluded for at least (...) as long as the exi- ference of 64,664 credits remains unclear. The BioCarbon sting uncertainties concerning verification of the impacts fund consists entirely of sinks (www.carbonfinance.org). of sinks upon developing countries have not been clarified.“ The social acceptability of sinks has been refuted in many Sinks - a dubious affair cases by numerous investigations. This is mainly due to the fact that it is mostly monocultures of fast growing trees In its special report in 1998 the German Advisory Coun- such as eucalyptus with no or little benefit for the popu- cil on Global Change (WBGU), called the sink offsets „one lation living in the areas. Often people are driven off their of the biggest weaknesses of the Kyoto Protocol“ (WBGU, (community) land, to create new areas for sinks. A well- 1998). This could create incentives which are harmful to known example is a CO2 plantation on Mount Elgon in eas- biodiversity and ecosystems. The Advisory Council recom- tern Uganda. David Wakikona, a Member of Parliament for

25 2. Luxembourg’s CDM projects

Manjiya district told the Ugandan newspaper New Vision: cked by ASTM, documents this project and gives a voice „The new national park boundaries were unilaterally esta- to displaced farmers, „If your plants are emitting too many blished and more than 10,000 people displaced. The park greenhouse gases, then close them, but do not push us rangers are very militarized, and have shot dead about 50 from our land!“, and shows how the carbon dioxide - rat- people.“ (CO2NNED, 2006). her than remaining sequestered in the trees - prematurely The background: The extension of the national park rises to the sky again in the shape of huge clouds of smoke, boundaries was related to a contract between the Dutch because the angry farmers have set the CO2 plantation on FACE Foundation (Forests Absorbing Carbon Dioxide fire. (Zembla, 2008) Emission) and the Uganda Wildlife Authority (UWA), the From the early mistakes sink operators have learned to in- National Park Authority, which is also responsible for law tegrate local residents, particularly through maintenance and order matters. The Dutch film „Het CO-Alibi,“ sto- contracts for the plantations. Ecuadorian and Indian Stu- dies show, however, that too often the charges for the up keep of the plantations are much too low (Acción Ecológi- ca, 2005, Yadav, 2008). The fundamental problems of the sinks have, however, re- mained the same. Ten years after the WBGU report, despite an immense production of knowledge, the uncertainty in the calculations has not been significantly lessened, so that the European Union in its climate proposal in January 2008 decided against the inclusion of sinks in the EU emissions trading system. On its website, „Questions and Answers on the Commission’s proposal to revise the EU Emissions Tra- ding System“ of 23 January 2008 (European Commission, 2008) it says: „Insufficient solutions have been developed to deal with the uncertainties, non-permanence of carbon storage and potential emissions ‚leakage‘ problems arising from such projects. The temporary and reversible nature of such activities would pose considerable risks in a company-based trading system and impose great liability risks on Member States.“ From these generally negative experiences, but above all for the fundamental reasons given, we believe it is unneces- sary to take a further closer look at the BioCarbon Funds individual sink projects. Tropical mountain forest - Mount Elgon, Uganda. Illustration: flickr

26 2. Luxembourg’s CDM projects 2. Luxembourg’s CDM projects

Snapping up a „bargain“

The fact is that the Luxembourg Government, despite these serious uncertainties, has spent $ 5 million on sink projects. The likely low price - $ 4.18 per ton for these „emission rights“ is not even half as expensive as other credits – is a bargain to some. But it has helped itself to too much. The Marrakech Accords to the Kyoto Protocol allow the use of sinks rights up to a level not exceeding 1% of 1990 emissions, which is 130,000 tonnes per year, or 650,000 tonnes over the five years between 2008 - 2012. Luxembourg’s $ 5 million share of the BioCarbon Fund entitles it to 1.2 million credits, which is almost twice as much as permitted ...

Sources:

- Acción Ecológica (Hg.): Plantando Carbono – Cosechamos Miseria, Qui- to 2005 (Film about sinks in the Andes) - CDMWatch (Hg.) : The World Bank and the carbon market, Rhetoric and Reality, April 2005, - CO2NNED, Carbon Offsets stripped bare, in : New Internationalist, Juli 2006 - EU Commission: Questions and Answers on the Commission’s proposal to revise the EU Emissions Trading System, Brussels, 23.1.2008, http:// ec.europa.eu/environment/climat/climate_action.htm - Lux, Lucien / Environment Minister: Answer to Parliamentary Questi- on No. 2418 of 26.3.08 from Deputy Eugène Berger, Luxembourg 9.5.08, www.chd.lu - German Advosory Council on Global Change (WBGU): The Accounting of Biological Sinks and Sources Under the Kyoto Protocol: A Step For- wards or Backwards for Global Environmental Protection? Special Reports 1998 - World Bank : BioCarbon Fund, Backgrounder, www.carbonfinance.org - Yadav, Kushal: That’s your sink. Cleaning Spain, Canada, Sweden, Japan’s air in remote villages of Himachal Pradesh, New Delhi 2008. - Zembla (Production company): Het CO-Alibi, Film, broadcast on Vara, NL on 2.3.2008

27 2. Luxembourg’s CDM projects

2.4. Electricity for the village in stands on former village common land. The project gene- Nigeria rates emission rights, because the plant generates electricity from gas and emits less CO2 than if the same amount The 700,000 credits per year from the second largest proof electricity – according to usual practice in oil rich Ni- ject in the World Bank’s Community Development Carbon geria - would be produced from diesel (Aba Cogeneration, Fund, to which Luxembourg is a party, take us to Nigeria 2006). This difference provides the emission rights, which - precisely to Umuojimo Ogbu village, in Osisioma Ngwa the operator is able to sell, for instance, to the Community district, near the city of Aba, in Abia state. The project Development Carbon Fund that Luxembourg is a party to. involves constructing a 120 megawatt power plant that The project aims in this way to generate a total of over 1.1 generates electricity from gas. The operator, Geometric million credits, about 300,000 of which after 2012 (Pinna, Power Limited, sells electricity primarily to industrial es- 2006). The location of Aba was chosen because of the exi- tablishments in the region around Aba and also to Aba’s sting gas pipeline and sufficient potential business custo- municipality-owned utilities. The Community Develop- mers who use electricity are available. Incidentally, the gas ment Carbon Fund, as its name implies, has a commu- supplier is Shell Nigeria Gas Limited. Shell plays a leading nity development remit and so the fund’s website (www. role in the Niger Delta in one of the biggest environmental carbonfinance.org), provides a description of the proposed and social disasters in world oil production (www.foe.org. projects agreed with the local administration on behalf of au). The „Shell“ name is also back on the website of Geo- the community: among other things they include a school, metric Power under „Investor Relations“ (www. a health post, a water borehole, and a 1-km long asphalt geometricpower.com). So much for carbon financed com- access road with street lighting, from a State Government munity development ... property, via the power plant, to the local community road. The World Bank has poured out its cornucopia on this one Sources: village not because it is a model project for the electrifi- cation sub-Saharan villages, but because the power plant - Aba Cogeneration appraisal sheet / Integrated Safeguards Datasheet, Ap- praisal Stage, June 30, 2006 - World Bank: Community Development Carbon Fund: Aba cogeneration project, in: http://web.worldbank.org - Andrea Pinna / Worldbank: CDM Projects in Africa, Presentation at Car- bon Finance Event, Nairobi 11. Nov. 2006 - www.geometricpower.com/projects.htm: Aba Power Project - www.foe.org.au (website of Friends of the Earth Australia with many details about Shell’s role in the Niger delta region). Illustration: flickr

28 2. Luxembourg’s CDM projects 2. Luxembourg’s CDM projects

2.5. Landfills

22% of Luxembourg‘s emission rights come from landfills. In seven projects, methane, which otherwise would escape into the air is captured (so-called „Landfill Gas Capture“) and in twelve projects, energy is generated from waste („Waste Management“). The only project Luxembourg is directly involved in (i.e. not via the detour of a fund), is a landfill in El Salvador.

Methane capture in El Salvador

Almost 20 km north of the Salvadorean capital, San Salva- dor, near the town of Nejapa, is located the capital’s central landfill. It is run by the Salvadorian company, Mides. The Canadian company Biothermica, together with Mides, in phase one, is capturing the escaping methane; in phase two, a landfill gas to electricity plant is built to feed electricity into the public network. Luxembourg draws 325,000 The CDM project at the Nejapa landfill is co-financed by Luxembourg. credits from the project, 6% of all emission rights it has Illustration: google earth purchased to date; the Project Design Document gives a sale price of $ 6.2 per tonne (Landfill Gas, 2005). Mides receives 5% and Biothermica 95% from the proceeds of the to be located where methane can be captured and used sale of emission rights. The project at the national level, most usefully and profitably. As the promoters are often through technology transfer and bio-energy contributes to public institutions such as city administrations, they can sustainable development. The ratio of 5% to 95% does not more easily involve local residents. C. Rothballer points to however contribute to climate justice: this generates effec- two CDM landfills in Brazil where he found that the CDM tive emission credits for a Canadian company at a cheap rules do not automatically improve residents’ quality of life, location in the South, while little of the profit remains in but through greater participation of local people he sees an El Salvador. opportunity for social compatibility (Rothballer, 2008). The large number of landfill projects is due to the fact that The fact that this opportunity is not necessarily used, we methane is worth around 23 times as much as carbon dio- see in the following project, which is also co-funded by xide in climate terms. This multiplication factor makes for Luxembourg. It is one of the twelve projects of the Waste a fairly fast return on investment. Rubbish is also a huge Management Projects methodologies group and takes us to problem in developing countries, and those projects tend New Delhi in India.

29 2. Luxembourg’s CDM projects

The Timarpur-Okhla Waste many futile resuscitation attempts, finally the rubbish was Management Project to be burnt again to generate electricity and credits. The facility was signed on 10th November 2007 as a registered Incineration projects, not only in India, are the subject of CDM project and from 1st April 2009 to 2019 will supply much controversy and opposition by non-governmental about 263,000 credits per year (http://cdm.unfccc.int/in- organisations and residents. Not one of the existing pro- dex.html). jects in India has to date provided evidence that they work The SGS validation report of September 2007 notes that well. no adverse environmental or social effects are expected to Take, as an example, the Timarpur-Okhla project in nor- result from the project (SGS, 2007). The Project Design Do- theast Delhi. As the first Indian project designed to burn cument of September 2007 claims the project is founded rubbish for power generation, it was built in the mid-80s, on good neighbourly relations with local residents: „The operated for three weeks, and then stopped because of rub- local population will benefit from the project. There are bish supply problems. Ever since the plant lay still. After direct and indirect employment opportunities. The project proposes no resettlement of local residents groups, so that no direct conflict with the local population is available.” (The Timarpur-Okhla ..., 2007) This assessment would, however, soon be identified as mistaken. In spring and summer of 2008 the residents of the Gaf- far Manzil, Sukhdev Village and Hazi Colony organised protests against the construction of the incinerator in the densely populated residential area of Okhla. This was because the planned incinerator technology would emit toxic dioxins, furans and heavy metals such as mercury and lead. The carcinogenic dioxins are created during incineration of PVC or chlorinated plastic. The resistance of the population also lead to considerable delays in commissioning (Yadav, 2009). The incinerator also flies in the face of the level of techni- cal knowledge within India. The Indian Environment and Forest Ministry in a report came to the conclusion that the thermal treatment of solid urban waste is not feasible with low-energy value waste - which is typically the case of the rubbish of India‘s cities. The report therefore recommends that because of the environmental impact and high capi- Outraged local residents invade the Timanpur-Okhla facilities.

Illustration: CSE tal and maintenance costs, instead of burning municipal

30 2. Luxembourg’s CDM projects 2. Luxembourg’s CDM projects Illustration: flickr The incinerator will be located in a densely populated area, discharging, among other toxins, heavy metals such as dioxin and furan. Illustration: CSE

waste, composting and recycling of waste are the preferred Sources: options. The Timarpur-Okhla incinerator project is supposed to ge- - Landfill Gas to Energy Facility at the Nejapa Landfill Site, El Salvador. Project Design Document, version 02, 22 Nov. 2005 nerate 163,000 credits for the Asian Pacific Carbon Fund - Rothballer, Carsten: Der grüne Zeitgeist. Die Inwertsetzung der Atmo- from 1 April 2009 of which Luxembourg’s share is around sphäre und der nachhaltige Entwicklungsbeitrag des Clean Development 16,000 tonnes of CO2e, at a price of EUR10-EUR13/t. Mechanism in Brasilien. Forschungsarbeit, Research, Vienna, Dec. 2008 - SGS (Ed.): The Timarpur - Okhla Waste Management Company Pvt. Ltd‘s Luxembourg is thus co-funding a dioxin catapult in a re- integrated waste to energy project at Delhi. Validation Report, 11.9.07 sidential area of the Indian capital. Here, the environment - The Timarpur-Okhla integrated Waste Management Company Pvt. Ltd‘s minister, who is responsible in the final analysis for our integrated waste to energy project at Delhi, Project Design Document, version 03 of 28.7.06 and version 04 of 6.9.07 (final sentence of Section E.1 emission rights purchases, must verify if we are acting Stakeholder‘s comments, p. 61). responsibly by benefitting from such rights; and also the - Yadav, Kushal / CSE India: internal document about Timarpur-Okhla, development aid minister, a member on the Board of Go- 2009 vernors of the Asian Development Bank, that manages the fund, certainly has other courses of action open to it. Incidentally, as of 22nd April 2009, as a result of opposition from the local population, the plant was still not on line.

31 2. Luxembourg’s CDM projects

2.6 Power plant renewal in Azer- rated by this project alone. AzDRES is operated by the state baijan company, Azerenerij. To modernise its 20-year-old plants in Mingechaur, it applied for a first loan of $ 115 million from the EBRD, then - On the outskirts of the industrial city of Mingechaur, in because of rising costs – it requested a further $ 92 million, Azerbaijan, the Caucasian oil and natural gas rich state, is so that the long-term supply of energy in Azerbaijan might AzDRES, a huge power plant of advancing years. It produ- be profitable. In addition, the project aims to cut emissions ces more than half the country’s electricity, through the - particularly of sulphur dioxide and nitrogen oxides - and combustion of oil and gas. AzDRES is also a major supplier to increase efficiency. The project contains an environ- of emission rights for Luxembourg; the Government has mental action plan, including several other environmental a EUR 10 million share of the EBRD’s Multilateral Carbon components covering sewage, garbage, asbestos, etc. com- Credit Fund (European Bank for Reconstruction and Deve- prises (EBRD, 2005). A feasibility study was prepared for lopment), more than half of whose credits (57%) are gene- Azerenerij by USAid.

Azerbaijan is well known for its oil and gas wealth and is important to Europe for the transit of these commodities from Central Asia. Illustration: flickr

32 2. Luxembourg’s CDM projects 2. Luxembourg’s CDM projects

EBRD‘s role in Azerbaijan

The Bank has traditionally played a key role in the development of the oil and gas sectors in Azerbaijan, such as the construction of the Baku-Tbilisi-Ceyhan oil pipeline (BTC) and the development of oil and gas fields. Of the total volume of EBRD projects in Azerbaijan, costing EUR 3.9 billion, the energy sector alone accounts for EUR 3.5 billion, and the BTC pipeline at EUR 962 million is the largest single project; it began operating in July 2006. „The economy has fundamentally changed since the increase in oil production and opening of the BTC pipeline. While the average economic growth was around 10 per cent during 2002-2005, the real GDP grew at more than 26 per cent in 2005 and reached an unprecedented 35 per cent in 2006, making Azerbaijan the fastest growing economy in the world. The dramatic growth has resulted in a more than two fold increase in GDP per capita over the last two years. Increased oil production and exports together with high prices, created an economic structure that is more than ever focused on oil. Currently the oil sector The AzDres plant in Mingechaur is state owned. accounts for about 54 per cent of GDP and three quarters Illustration: google earth of industry.“(EBRD, 2007) The bank will lend more in the future to support diversifi- cation of the economy, without, however, renouncing fur- are on average only one tenth as large as AzDres. Also risks ther investment in the oil and gas sector, including its pipe- associated with selling the rights are low, as the main cu- lines, as the country has huge geo-strategic importance as stomers are sitting on the Fund’s Board of Governors, such a transit country outside of Russia for fossil raw materials as Luxembourg, which is represented through its Minister from the Caspian Sea and Central Asia. of State. The EBRD profits twice from the project: through interest A number of questions arise in connection with this pro- income and through revenue earned on the sale of a total ject. A CDM project should be in addition to and different of 4.5 million credits. The EBRD therefore has every reason from usual practice in the country. Current practice, howe- to build the Multilateral Carbon Credit Fund somewhat on ver, is the aforementioned power plant itself – such that it the foundations of AzDres project. The other CDM projects produces more than half the country’s electricity. A wind in the fund together bring in only 3.3 million credits and farm or a dam would constitute departing from current

33 2. Luxembourg’s CDM projects

practice, continuing the same practice, while improving it certainly isn’t. Nowhere to be found in the EBRD’s strategy paper is a passage which states that reducing emissions the primary purpose of modernising – rather it emerges as a positive side effect of improved economic efficiency. Nowhere does one get the impression that the modernisation hinges on whether it is a CDM approved project – at the present time (March 2009) it has also not yet been registered as a CDM project at the UNFCCC (UNFCCC, 2009). Luxembourg has already paid for rights from a fund whose main supplier of credits has not yet even been registered as a CDM project at the UNFCCC. We are paying for rights which come from a project in which more electricity will be produced from oil and gas - just more efficiently and with less emissions - and therefore this is not deferring from usual practice in the country, because the plant represents the usual practice for power generation in Azerbaijan. With such mental acrobatics, any power plant in the world can be legitimised and rehabilitated as a CDM project - neutrali- zing the CDM’s offsetting effect. CDM projects must be free of any additional grants from development funds – doesn’t this criterion apply here to USAid’s feasibility study? And why is it that „the fastest growing economy in the world“ (see above) can only rehabilitate its (own) biggest power station with funds obtained through the sale of emission rights?

Sources:

- EBRD: Project Summary Document, www.ebrd.com/projects/psd/ psd2005/26891.htm: Azdres Power Plant Rehabilitation - European Bank for Reconstruction and Development (BERD): Strategy for Azerdbaidjan, As approved by the Board of Directors on 18.9.07 - UNFCCC: http://cdm.unfccc.int/index.html

34 2. Luxembourg’s CDM projects 2. Luxembourg’s CDM projects

2.7. Siberian gas

Worldwide natural gas rises up from underground as a result of the extraction of petroleum. Until a few years ago this gas was seen only as an inconvenience or a cost factor for the oil companies, as there didn’t appear to be a com- mercial use for it. The cheapest answer was to let it vent or to burn it off. With the gas harmful sulphur and nitrogen oxides, and carbon monoxide and various hydrocarbon compounds were released into the air. People living around gas flaring fields - whether in Siberia, Ecuador or Nigeria - have above average rates of cancer, respiratory problems, deformities, paralysis, headaches and other fatal diseases (Rosch, 2008). Therefore physicians and environmental and human rights organisations have been urge a worldwide ban on gas venting and flaring. Across the world according to the Global Gas Flaring Reduction Partnership (GGFR), over 150 billion cubic meters of gas is flared annually. This puts about 400 million tons of CO2 into the air - 30 times Luxembourg’s emissions (GGRF, 2006). The GGFR is an umbrella organisation of the largest oil companies and producer countries of the world under the leadership the World Bank since 2002. It supports the pre- paration of new CDM and JI methodologies (GGFR, 2008) – and has done so with success: the UNFCCC recognised the avoidance of gas flaring as a methodology. Russia is the world‘s number one gas flaring country (about 38 billion m3) – burning twice as much as in second placed Nigeria (about 20 billion m3). Every year more than 50 million tons of CO2 are released into the atmosphere from Russian soil. If this can be avo- ided by capturing the gas and using it in JI projects, Russia can generate potential revenue of about $ 250 million per The gas that is released as the oil is pumped is usually simply burnt off.

year until 2012 (Shevchuk, 2008). Illustration: ASTM

35 2. Luxembourg’s CDM projects

Using gas instead of flaring the largest Russian oil company, is investing approximately $ 129 million in a compressor station to be used in the In Kondisky District in the south of the Khanty-Mansisk Komsomolskoje oilfield to capture, compress and pipe gas Autonomous Region and in the middle of the western Si- to Gazprom’s national network (www.energy-enviro.fi). berian oil region, Yukon Gas runs a JI project in the Danilo- In 2008 Rosneft signed a contract with the World Bank to wski oilfield, in which the vented gas is liquefied primari- supply credits - the project is projected to save 2.4 million ly for heating in the region ( Flare gas ..., 2006). Between tonnes CO2e annually. It represents the largest project in 2008 and 2012, according to the Project Design Document the Carbon Fund for Europe and Luxembourg is entitled to 433,000 tonnes of CO2e saved. These savings are sold as 300,000 credits from this project alone. credits to the European Investment Bank’s and the World Bank’s Carbon Fund for Europe. Luxembourg’s share of „Hot air“ from Russia this EUR 50 million fund is EUR 10 million, i.e. 86,000 credits (but the government claims they have rights on Why, however, is Russia allowed to sell credits at all - it is 124,000 credits). a developed country? Russia committed itself through the A second, much larger JI gas recovery project is located on Kyoto Protocol to maintaining emissions at 1990 levels. the northern bank of the Taiga, in the Urengoj oil and gas However, Russian greenhouse gas emissions fell as a result centre in the Yamal Nentzen Autonomous Region. Rosneft, of the collapse of the Soviet Union and the Russian economy from 1990 to 2005 – effectively, unaided - by nearly 29%. This 29% approximately, will likely form its „emission reserve” until 2012. A. Shevchuk notes that:“ ... we have 29% in reserve which can be sold at a profit.“ (Shevchuk, 2008). Russia can, according to Kyoto Protocol sell greenhouse gas reductions as credits, as long as their sum is not greater than this margin of 29%, and provided they are achieved and measured using recognised methodologies, and the same goes for the other Kyoto countries of the former So- viet bloc, that are not in the EU. In Kyoto jargon this margin is referred to as „hot air“ – the candy to get the former Eastern Bloc countries into the boat. We are not talking about peanuts, but of a volume of almost 800 million tons of CO2 per year for Russia (UNFC- CC, 2007), enough „hot air“ to neutralise double the 8% overall EU reduction target (making the reduction target a The map gives a visual impression of the enormity of gas flaring in Western Siberia.

Illustration: flickr complete farce).

36 2. Luxembourg’s CDM projects 2. Luxembourg’s CDM projects

The conversion of plants in order to utilise the escaping gas is being financed by emissions trading. Illustration: flickr

37 2. Luxembourg’s CDM projects

Filling up for Gazprom? - Global Gas Flaring Reduction Partnership (GGFR) : “Using Russia’s As- sociated Gas”, Washington DC 2008 - Global Gas Flaring Reduction A Public Private Partnership (GGFR, Hg.) : These projects, which capture the gas instead of it being “The News Flare” Issue No. 2, April-July 2006 flared are all sensible and long overdue - in Russia and - Platonova-Oquab, Alexandrina / The World Bank: “Gas flaring reduction: contribution from carbon finance”, Presentation at Moscow Carbon Mar- throughout the world. But instead of creating flexible ket Forum, April 28-29, 2008 mechanisms as economic incentives for using the natu- - Shevchuk, Alexander : The Kyoto Vector for the oil business, in : Oil of ral gas, all that would be necessary to stop venting and Russia, No. 4, 2008 - www.energy-enviro.fi/index, 30 September 2008 : Russian oil company flaring would be simply to prohibit them, like any other signs Kyoto deal to make use of waste gas environmental pollution. Corporations make net annual - UNFCCC: National Greenhouse Gas Inventory data for the period 1990- profits amounting to many billions of dollars - such as Ex- 2005, SBI/2007/30, 4.10.07, www.unfccc.int xon, which made $ 36 billion in 2005; they are only able to achieve these dream results because they and others keep their production costs as low as possible - at the expense of humans and the environment in the region. It makes a difference to the climate. A worldwide ban on flaring would mean a real reduction of greenhouse gases – but would also diminish the profits of oil companies. When an incentive is created through the sale of emission rights (and additional profits) only a part of the gas is not flared and it changes nothing in total levels of global greenhouse gases - only now, instead of the gases coming out of the Siberian soil, they come out of Danish chimneys or Luxembourgish exhausts. When refuelling, our Kyoto Cent goes into the Kyoto Fund via the Carbon Fund for Europe to Yukon Gas, Rosneft and Gazprom who garb themselves in green, while in climate terms absolutely no change has been achieved.

Sources:

- Broere, Wendel : Der Traum vom Ende des Abfackelns, in : Shell World, 5.3.2008, www.shell.com/swonline - Flare Gas Reduction Project in Kondisky Region, Joint Implementation Project Design Document Form, June 2006 - Rosch, Frank: „Am anderen Ende der Pipeline“, Luxemburg 2008 (Film commissioned by ASTM about oil production and gas flaring in Ecuador)

38 2. Luxembourg’s CDM projects 2. Luxembourg’s CDM projects

2.8 A fresh south wind blows ximately 20% are wind energy projects. Up to 2012 they will generate about 18 million credits. There are only 54 About one third of Luxembourg credits come from wind projects registered with a total of 1.3 GW, about 15% of projects - and this is positive. There are six wind farms in India‘s capacity. If all the projects currently in the queue are total - one each in Bulgaria and Romania, generating cre- registered, the entire CDM capacity of 4.15 GW will equal dits for the Multilateral Carbon Credit Fund, one in India roughly half of the installed capacity in India. The CDM- and Pakistan, producing credits for the Asian Pacific Car- wind turbines could generate 20-25% returns. However, bon Fund, and two large 49-megawatt parks in China,. the Indian success story of wind power is based primarily These two Chinese wind farms, the Liaoning Changtu Wind Farm and Guohua Inner Mongolia Wind Farm, which together generate 1,642,000 credits, are backed by Swiss Re Global Markets Limited, a special fund, which Luxembourg has recently signed a purchase agreement with. The Liaoning Changtu Wind Farm, which is located in the north of the northern Chinese industrial province of Lia- oning, in the city of Tieling, was registered on 16th April 2007 and from that day until 15th April 2014 will generate 101,000 credits per year (Liaoning, 2007). The Guohua Wind Farm is located in the far north of China, near the city of Hulunbeier, and was registered on 3rd June 2007 and from then until 2nd June 2014 will produce 124,500 credits per year (Guohua, 2006).

Booming wind energy in China and India ...

In February 2009, Robert Poth sketched the Chinese wind energy market as follows: „China is already, as of 2008, the world‘s most important location for the industry, or it will attain this position in the current year (2009). (...) In general, the success of wind power in China is down to state support and the conditions awarded to wind power projects. „(Poth, 2009) The situation is similar in India, according to the Indian magazine „Down To Earth“, in its August 2008 article In China and India wind energy is a booming industry.

„Breezy Business“. Of the 966 Indian CDM projects appro- Illustration: flickr

39 2. Luxembourg’s CDM projects

on a depreciation rate of 80% in the first year, making them competitive with diesel power plants. To become CDM- accredited, they are obliged to use creative accounting to show that their project could not be realized without the CDM. „Few are caught, most sail through.” according to Down To Earth (CSE, 2008). Not only in China and India, but globally wind energy is booming. At the end of 2008, the installed capacity of wind power plants had reached about 125 gigawatts worldwide, estimated the magazine Windpower Monthly in January 2009 (Poth, 2009). „Between 2005 and 2007 alone, the installed capacity of wind power plants doubled worldwide from 47 to 94 gigawatts, driven by new projects mainly in the US, Spain and China ...... Meanwhile, it is a fact that when oil prices rise above $ 70 per barrel ... electricity from diesel power plants in many regions of the south is already more expensive than electricity generated from wind turbines.”(Jensen, 2009) Current CDM rules require proof of the „additionality“ of each project. It is unlikely that in one of the biggest boom industries in the world so many projects would be econo- mically unsustainable, without the proceeds from the credits. It is also difficult to understand, how CDM windmills deviate from normal business, when nearly half the national wind energy capacity is from CDM projects, as is the case in India. Undoubtedly, despite all these reservations, one of the CDM’s conditions has been met here: the transition from fossil to renewable energy sources is being promoted in the southern part of the world. But for the two wind farms in China another problem emerges. According to their project documents both generate combined credits of 225,500 per year over the seven-year period from 2007 to 2014, making a total of 1.58 By end-2008, worldwide energy capacity from wind farms totalled 125 gigawatts.

Illustration: flickr million credits. In his answer to a Parliamentary Question

40 2. Luxembourg’s CDM projects 2. Luxembourg’s CDM projects

on 8th May 2008, Minister Lux: „On the other hand, the stions No. 2418 of 26.3.08 from Deputy Eugène Berger, Luxemburg 9.5.08, www.chd.lu state of Luxembourg has signed an agreement with Swiss - Poth, Robert : Tanz mit dem Drachen, in : Südwind, Nr. 1-2, Feb. 2009 Re Global Markets Limited to transfer a total of 1,642,000 - UNFCCC: http://cdm.unfccc.int/index.html, 2009 CERs, with 30% of the emission credits guaranteed. Swiss Re will ensure these credits derive from wind power projects in China. The projects in question are Liaoning Changtu Windfarm, where 66 turbines will be installed, each generating 750kW, and “Guohua Inner Mongolia”, where 39 turbines will be installed, each generating 1250 kW.“ (Lux, 2008) How can we acquire 1.642 million credits from two wind farms, which together only produce 1.58 million credits? If anything, Luxembourg would have to be the sole buyer of all its credits... In the UNFCCC secretariat’s lists only Great Britain appears as a participating country in the Liaoning project and only Japan in the Guohua project, but neither Swiss Re nor Luxembourg (UNFCCC, 2009). Did these two countries sell their rights within a year of acquiring them to Swiss Re, and did Swiss Re in turn sell them to Luxem- bourg? This seems quite unlikely. It is also striking that in neither of the ministerial responses about the price of credits from the two wind farms, was any mention ever made of the total cost of the purchase agreement, nor the projects’ annual production. This is a pity - the statement that one third of Luxembourg‘s credits come from wind farms, will only stand upon further clarification.

Sources:

- CSE (Hg.): Breezy Business, in: DownToEarth, August 1-15 2008 - Jensen, Dierk :Wind weht nicht nur im reichen Norden, In : Südwind, Nr. 1-2, Fe 2009 - Guohua Windfarm Co. Ltd : Project Design Document, Version 03.1, 28.7.2006 - Liaoning Changtu Windfarm Project: Project Design Document, Version 1.4, 8.1.2007 - Lux, Lucien / Environment minister : Answers to Parliamentary Que-

41 3. Conclusions

3.1 The real impact our emission dits. The approach used here is an very approximate one rights have on the climate based on figures taken from various international studies - an accurate assessment would require an external neutral After the journey through „our“ projects, we want to know on-site evaluation (i.e. one not paid for by the project ope- what they are actually contributing as a whole in the fight rator) of each project. against climate change. In the table „The reduction contributions of our projects“, projects which use the same 1. Hydroelectric power: methodologies as highlighted in the previous examples are grouped and sorted according to the Luxembourg fund’s „Our“ ten hydroelectric power plants in the fund altoge- weighted share. The three groups in the table, all largely ba- ther contribute 180,405 tonnes or 3% of Luxembourg’s sed on biomass (Landfill Gas Capture, Waste Management credits. The two that we looked at in Honduras and China, and biomass), are considered together in the text as the „bi- were being built long before being awarded CDM project omass” group. The column „Share“ shows the weighting of status – so they cannot be included. Barbara Haya of In- each methodology as a percentage of Luxembourg’s total ternational Rivers, in her dissertation on the additionality credits. In the „Additionality“ column, the same standards of CDM dams has come to the conclusion that: “Evidence are applied to „our“ groups as are used in international strongly suggests that the great majority of the hydros in CDM analysis. This yields the real estimated reduction con- the CDM pipeline are non-additional.“ (Haya, 2007). We tribution, and - in the last column – each methodology’s assume that „our“ ten dams overall do not differ signifi- real weighting as a percentage of Luxembourg’s total cre- cantly from all other CDM dams around the world. As Haya

Table 1: Our projects’ contribution to reduction Emission rights Luxembourg’s share Share Additionality Reduction Share 1. Hydro energy projects 2 304 870 180 405 3% 50% 90202 3% 2. Wind energy projects 3 204 000 1 760 309 33% 80% 1408248 46% 3. Sinks 4867352 452664 8% void 0 0% 4. Landfill gas capture 2 093 000 654 026 12% 80% 523221 17% 5. Waste management 3 196 000 456 394 9% 80% 365115 12% 6. Biomass 2 755 000 222 651 4% 80% 0 0% 7. Other projects 7 006 000 833 822 16% 80% 667058 22% 8. Fossil fuel projects 7 352 000 781 026 15% no 0 32 778 222 5 341 297 100% 3 053 843 (57%) 100%

42 3. Conclusions

has not quantified the description “the vast majority“, we will attribute a 50% additionality factor to „our“ dams. This means their contribution to the reduction of greenhouse gases amounts to 90,000 tonnes. Though they substitute fossil with renewable energy – dams have long been widely used to produce energy in the south - they do not amount to technology transfer.

2. Wind power:

According to government information wind power provides 1.76 million credits, a third of all Luxembourg’s credits, and is the most widely applied methodology. It is hard to comprehend, however, why one of the biggest worldwide growth industries, needs additional revenue from the sale of credits. It would be appropriate here to take on board the Öko-Institut’s assessment that, due to weak standards and inconsistent procedural rules, “20% of certified emission reductions under the initiative may have happened even without CDM financing” (Schneider, 2007). So, only 80% should probably be counted, i.e. 1.4 million credits. The biggest issue is, however, the questionable numbers, as it seems illogical that Luxembourg would be the sole buyer of all credits from the two Chinese wind farms. It is more likely that the total quantity of „our“ wind credits is much lower than stated. These quantitative problems aside, the wind power clearly 4. + 5. + 6. The biomass group: contribute to emissions reduction and structural adjust- ment. The majority of projects are landfill gas capture, waste management and biomass. They generated a total of 1.33 3. Sinks: million tonnes, i.e. a quarter of „our“ greenhouse gas reductions. Here too, the Öko-Institut’s estimation that 20% These only sequester carbon temporarily and are therefo- of credits come from non-additional projects, could be a re a singular waste of time. They make no contribution in rather realistic approach, so in reality, we can count on just terms of reduction, and no technology is transferred. over 1 million tonnes of reduction. Many of the projects

43 3. Conclusions

priate; 80% equals 667,000 credits. Many of them contribute to technology transfer in support of renewable energy. However, the fact that only one project uses solar energy (solar homes in Bangladesh) and is also not yet registered, is regrettable.

8. The group of „fossils“ projects:

These are four projects, using oil and gas, at best more efficiently, which together generate 781,000 credits for Luxembourg. In themselves they may be positive, but their additionality must be questioned. Here, the global oil and gas industry players and their banks take advantage of the lack of environmental laws in the weak democracies of Ni- geria, Azerbaijan and Russia. These credits cannot be counted. They do not finance a transition to renewable energies, on the contrary, they reinforce the existing fossil(ised) fuel structure. According to present arrangements, the projects altogether Floor plans of the Timarpur-Okhla incineration plant in New Delhi, India.

Illustration: CSE generate only an estimated 3.2 million tonnes for Luxem- bourg emission rights to compensate for our domestic emissions, which are 60% of the 5.3 million purchased cre- contribute to a technology transfer towards the use of re- dits. The remaining 2.1 million credits, more than a third, newable energies. However, some also have a very nega- may be considered “fake” carbon credits. If one takes the tive impact on the local population. The high proportion shares already purchased in the sink fund and the average of landfill gas capture projects is noteworthy. Since public price of EUR 9.5 per tonne in the rest of these funds, almost institutions are often the contracting party, these projects EUR 20 million have been spent just to fulfill commit- also have greater potential to involve the local population. ments under an international treaty, but in reality nothing has been done to reduce greenhouse gases. 7. The remaining group of „other projects“ By the end of December 2008, 5.3 million credits had been acquired (or their purchase agreed), making up a good This includes, for example, geothermal projects, geother- quarter of the required reductions by the end of 2012, of mal energy use, energy-efficient Indian brickyards or the minus 28%. The government has in the 2nd Allocation Plan only solar energy project. They provide 834,000 (or, 16%) of and the Kyoto Fund all the resources needed to purchase Luxembourg’s credits. Here too the 20% rule seems appro- these rights. If we continue in this manner and purchase

44 3. Conclusions

the remaining estimated 15 million credits from similarly reductions rather than on their own reduction efforts, and distributed funds and individual projects, then by 2012 we ignore their contractual agreement in the Kyoto Protocol, will have spent a further EUR 120 million (assuming con- that acquisitions may only be “supplemental”, and in the stant prices). If there are no fundamental reforms to the Framework Convention on Climate Change, that develo- flexible mechanisms in the meantime, then around a third ped countries must provide inputs, then we should not be of the money (about EUR 40 million) will have been wasted surprised if the developing world will conclude no further with no impact on the climate. contracts with such partners, since the costs of climate change are already much higher than the benefits from Sources: the sale of the credits. That is our moral and political and practical failure. And without a follow up agreement to the - Barbara Haya: Failed Mechanism. How the CDM is subsidizing hydro Kyoto Protocol, the future for the climate looks bleak. developers and harming the Kyoto Protocol, Berkeley, November 2007 - Schneider, Lambert/ Öko-Institut (Hg.):“Is the CDM fulfilling its environmental objectives? An evaluation of the CDM and options for improvement”, prepared for WWF, Nov. 07

3.2. And the outlook? Luxembourg does not contribute to combating climate change, commensurate with its responsibility and its abi- lity to contribute - and it should. The real Luxembourgish climate footprint will continue to be business as usual by the end of 2012, although the target of -28% will have been formally reached (completely through „outsourcing“), the whole thing is in fact a whitewash: whoever attains their target exclusively through the purchase of credits is merely engaging in an accounting exercise, not one where physi- cal emissions are actually reduced. Our actual emissions remain in the atmosphere, where no one who can remove them (sinks only sequester them temporarily). However, since the emission rights are purchased with fake credits totalling about a third, then even this accounting offsetting is fake. This means that by 2012 we will have spent EUR 180 million, and our economic structure would still be the same - and then what? If all industrial coun- Dhaka/Bangladesh: economic development in the South means transport generated C02 emissions will rise. tries – like us – rely entirely on the purchase of emission Illustration: ASTM

45 3. Conclusions

rows the scope for Luxembourg to shop, as the country has assumed it would meet its 2012 reduction target of 100% coverage through acquisitions.

General weaknesses of the CDM

Before we address the possible options, it is necessary to take a look at the general discussion surrounding the CDM. It would not make a lot of sense now to simply look for other projects since all projects are created according to the same rules. There are two basic problems:

(1) Luxembourg buys far too many rights and has reduced far too little at home. Emission rights can only be purchased to „supplement“, which means that the vast majority of the reduction must be made domestically. This is the fi rst and most important change needed.

(2) CDM is not working as it was originally intended. Hard- ly any of its goals have been achieved with the current set of rules: The loopholes get tighter - It makes almost no contributions to sustainable development in the project regions. Moreover, the question arises how Luxembourg will cope - It makes a wide arc around the poorest countries. after 2013 with the EU allowing its members less room for - It is as good as nothing in the area in which developing manoeuvre. The 2008 EU climate and energy package for country emissions are increasing at the fastest rate: traffi c. the period from 2013-2020, allows annual purchase rights - Its poor self-control mechanisms result in „fake credits“. equivalent to 3% of 2005 national emissions levels for the - Its contribution to technology transfer is essentially limi- non-ETS sector (this includes all sectors outside the heavy ted by the fact that the issue of patents is not affected. industry covered by the ETS). In addition, each member country may acquire the emission rights of other EU coun- CDM: Whoever has the most, gets the most tries and can save up unused margins for subsequent years (those, for example, that use only 2% in 2015 may buy 4% From a development perspective the very unequal distribu- in 2016). For some member states - including Luxembourg tion of CDM projects amongst host countries is most seri- - that maximum of 3% is actually 4%. Yet this clearly nar- ous. The table below is based on fi gures from the UN‘s Hu-

46 3. Conclusions

man Development Handbook 2007/08 and the UNFCCC’s three major CDM host countries. website. To point out the differences between rich and poor The table reveals the following: the CDM benefits those who developing countries vis-à-vis the Clean Development Me- are ahead, anyway, or, money attracts money. Qatar, the ri- chanism eight countries were selected in this comparison: chest „developing country“, exports by far the most credits - Qatar is - according to GNP per capita 2005 - the richest per capita. Big rich „developing country“ South Korea sold „developing country“ (and fourth richest country in the by far the most credits per capita (after Qatar) – along with world). China it is the big winner in the CDM game. The Korean - South Korea is the „developing country“ with the fourth projects generate the most credits per project in the world largest market (after China, India and Brazil), measured in (apart from Qatar and Nigeria, with their industrial gas). GNP in $. The Clean Development Mechanism is uninterested in the - Bangladesh, Nigeria and Haiti are among the „least deve- world’s poorest countries (unless they are oil and gas rich, loped countries“, with Bangladesh the most populous of such as Nigeria, as we have seen in Section 2.4). the poorest countries in Asia and Nigeria the most popu- That this is no coincidence, but a logical consequence of lous of the poorest countries in Africa (and it has oil). Haiti the high fixed costs and the calculation methods, Honorat is the poorest country in Central and South America. Satoguina demonstrated when he pursued the question as - In addition, China, India and Brazil because they are the to why there were so few CDM projects in the energy sector

Table 2: Who has made the most money out of CDM ? Country HDI Per capita Per capita CDM registered Estimated Share of all Credits per Credits per ranking GDP $ C02 emissions projects annual credits project thousand (2005) (2004) (08.04.09) credits inhabitants South Korea 26 16443 9,7 25 14734467 5,26% 589379 308 Qatar 35 53125 79,3 1 2499649 0,89% 2499649 3125 Brazil 70 4262 1,8 157 20124443 7,18% 128181 108 China 81 1702 3,8 508 158599104 56,61% 312203 121 India 128 710 1,2 415 34178013 12,20% 82357 30 Bangladesh 140 391 0,3 2 169259 0,06% 84630 1 Haiti 146 500 0,2 0 0 0,00% 0 0 Nigeria 158 700 0,9 2 4123669 1,47% 2061835 29 1939 2,4 1559 280153000 100% 179700 54

Source: Human Development Report 2007/08 and www.unfccc.int

47 3. Conclusions

How will the CDM be reformed?

At the climate summit in Poznan in December 2008, the CDM Executive Board, the CDM registry supreme authority, was mandated to reform (UNFCCC, 2008). One can only hope that this brings about genuine structural reform. The CDM Executive Board, however, is constantly under pressure from many sides. There is a new global caste of business consultants - project designers, validators, auditors and monitors play a key role in the CDM business and bring home the lion‘s share of the revenues. They argue in particular for a simplification of the recognition process. The largest among them - Det Norske Veritas – claims to have validated 50% of the first 1000 registered CDM projects. In November 2008 the CDM Executive Board suspended DNV’s accreditation because too many rules had been infringed. Points 28 and 29 of the reform mandate include clarifying the procedural rules for such suspensions,... in February 2009 Det Norske Veritas was again admitted. The influence of the large banks is huge - especially the US- No CDM boom in the poorest countries. dominated World Bank. It may well be the institution with Illustration: ASTM the strongest influence over the rules of the game, particularly through the introduction of new methodologies. With the USA joining, for whom emissions trading is a priority, in West Africa (Satoguina, 2007). He concludes his exten- the Bank’s influence will grow even further. It makes use sive book in resignation with the sentence: „As the studied of new methodologies primarily for its own interests and countries’ competitiveness is low in that CDM project sec- those of its major industrial customers, such as the major tor, it would make sense to investigate CDM opportunities oil and gas companies – clearly illustrated by the example of non-electricity related project types, such as in LULUCF of gas flaring (see Chapter 2.4 and 2.7). sector.“ (i.e. sinks projects). Joint Implementation projects, in the former Eastern The CDM has not helped the poorest countries to catch up, Bloc industrial countries, outside the EU, are at a much rather it has widened the gap within the group of develo- earlier stage than the CDM, however, the omens are not ping countries. The CDM has ultimately no contribution to good. All the credits Luxembourg has gained from JI pro- make to the developmental priority of poverty alleviation. jects are generated by large industrial projects. One gets

48 3. Conclusions

the impression that the Russian and Ukrainian oligarchs are only interested in dividing up the lucrative mannah of „hot air“ between themselves, which resulted from the economic collapse of the Soviet Union in the 1990s. These JI projects stabilize the existing fossil(ised) fuel structure and - like CDM projects – perpetuate a zero-sum game for the world‘s climate. We must therefore not put naive hope in a game whose rules are in large part infl uenced by the main instigators of climate change, who have no interest in a structural change in our country or around the world. Nevertheless, it would be wrong, to abandon the playing fi eld in resignation. Cli- mate change is a reality and we must not be railroaded by the jargon-spouting experts of the new international „Ky- oto jet-set „, with English code words and abbreviations,

who love to meet at climate summits, and allow ourselves Illustration: CSE as „laymen“ to no longer dare to interfere. The climate affects everyone - and we must get involved, even if we do not know all the ins and outs of Luxembourg’s 2nd Allo- Kyoto Protocol, the market for the remaining oil reserves cation Plan. has not gotten any smaller. The current CDM structure of project-based, company to company dealings - this also applies to JI - has achieved New global approaches little except transfer funds within the industrial and fi nan- cial elites of the industrialised and emerging developing Developing countries need our help to forge another de- countries (the fi lm, “Geschäfte mit heißer Luft (“Hot air velopment trajectory using less fossil energy than we did. transactions”) illustrates this with the example of Indian They have the potential to use renewable energies - and the CDM projects, Uebel / Ugurlu 2009). The invisible hand 2 billion people whose main source of energy is biomass of the market takes the money from the left pocket of the have a „right to development in the greenhouse“ (EcoE- pinstripe suit and puts it back into the right pocket. As long quity, 2007), using electricity and energy which is more as the issue of patents is not affected, the CDM often func- convenient for cooking and heating. The Stockholm In- tions as an export subsidy for companies in the north, with stitute and EcoEquity have produced in the „Greenhouse their technologies and products wanting to gain a foothold Development Rights Framework“ a model that points the in new markets in the south. (Morales, 2008). And the CDM way, in particular in defending the right of the poor of this has an added advantage for the oil and gas companies of world to develop and placing the burden of the fi ght against the North: in spite of the cap on emissions through the climate change on the global consuming class. The fi lm

49 3. Conclusions

„Para nosotros no queda nada“ (There is nothing left for Approaches of this kind also surface within the current us), produced by the Bolivian think-tank, CEDIB, on behalf development policy debate under the title „budget sup- of ASTM, documents the example of the energy poverty of port“. „Programmatic CDM“ or „budget support“ might indigenous Bolivians and the urgent energy needs of the offer developing countries funds, for instance, to cover poorest third of humanity (CEDIB, 2009). high depreciation rates or a premium for feeding renew- Alternative development paths are not achieved by free able energy into the conventional grid. Thus, for example, market forces alone – the CDM proves this. You need stron- the Indian Centre for Science and Environment proposes ger government control. For the Chinese and Indians, it is a state-subsidised „wind program“ inspired by the positive not the CDM framework but rather by state intervention, experience with the „Renewable Energy Law“ in Germany. such as high depreciation rates on the investments, that In this manner, parts of the public transport infrastructure has managed to make wind energy a boom industry. The costs could also be covered, or environmental laws could construction of urban subways and bus systems, and dense be given the required financial backing and subsidies could rail networks and bus routes in the country is not feasible be given to companies for switching to alternative energies. without additional tax funds. Environmental laws should It is just a matter of helping developing countries with the be adopted and enforced, where the protection of public initial steps which are not considered worthwhile by private health requires it. Such „programmatic CDM“, not based investors, at first glance. on individual projects, but whole sectors or policy areas, are currently being discussed by the whole panoply of CDM What to do in Luxembourg? emission traders to climate scientists and activists. Actors range from those who differ in nuance over reform to the We have seen that the unbridled use of the Clean Develop- CDM to those who completely reject it. (APRODEV 2009, ment Mechanism, as practiced by Luxembourg is in many CAN-E 2009, Environmental Finance 2008, Eurosolar respects counter-productive to the fight against climate 2009, Greenpeace 2009, IETA 2008, Okereke / Schroeder change: it is purely an accounting method for offsetting 2009). our own real emissions against fictitious emissions saved in the host countries, which is contaminated by „fake credits“, it contributes very little to sustainable development in the project regions, and it reinforces our fossil(ised) fuel structures. What does this mean for us in Luxembourg? The Kyoto Fund, which funds the purchase of the rights, can become a tool with which we in Luxembourg, in line with our share of responsibility for climate change and our economic capabilities, help countries of the South adapt to climate change and adopt less carbon-intensive development paths. The universally accepted polluter pays princi- The Oil Age will be short.

Illustration: flickr ple means that we as polluters must pay for the damage. It

50 3. Conclusions

may no longer be misused to purchases further pollution Sources: rights. From the Kyoto Fund, we should find resources for developing countries, firstly, to enable them to better - APRODEV (Hg.): Response to the Communication from the European Commission including Recommendations for the European Council, Feb. adapt to the consequences of climate change (this is not 2009, www.aprodev.net about charity but damage recovery), secondly, to give them - CAN-E Position Paper: The European Commission “Copenhagen Com- the means to start on a less carbon-intensive development munication”, Feb. 2009, www.climnet.org - CEDIB (Hg.): Para nosotros no queda nada, Bolivia 2009 (A film about path – through reformed CDM rules or through budget energy poverty, made on behalf of ASTM) support - and thirdly, to fund climate protection measures - D’Onsan: „,La dépollution, ça peut rapporter gros“, in: Courrier Interna- in Luxembourg itself. tional, Nr. 935, Oct. 08 (translated from The Wall Street Journal.) - EcoEquity / Stockholm Institute : The Right to Development in a Cli- The fact that, even with the best will in the world, no de- mate Constrained World, Berlin Nov. 2007 velopment policy criteria can be attributed to the rights ac- - Environmental Finance and Carbon Finance : Kyoto and the carbon quired to date is also because the bulk of them come from markets, Nov. 08 - Eurosolar (Hg.) : Alternativen zum Emissionshandel gibt es, www.euro- funds over which we have hardly any influence. solar.de, Mar. 2009 Luxembourg’s Interministerial Kyoto Committee, which - Glover, Julien: Vrai: il est rentable de polluer, Courrier International Nr. is responsible for the use of the Kyoto Fund, and inclu- 961, 1.4.2009 - Greenkorea: Top 10 Countries with High CO2 Emissions, Korea 2008, des officials from the Environment, Development, Econo- www.greenkorea.org mics and Finance Ministries, has to date given priority to - Greenpeace (Hg.): Carbon market mechanisms: bridging the gap for cle- the acquisition of cheap and secure supplies of emission an energy, 2009, www.greenpeace.org - International Emissions Trading Association (IETA) : Greenhouse Gas rights through recourse to the various funds. This com- Market 2008, Geneva 2008 mittee should be reformed, its staff increased and its wor- - Morales, Evo : Vom Prinzip der Solidarität, Stellungnahme zum Klima- kings made more transparent, i.e. we need clear criteria for wandel anläßlich des Klimagipfels zu Poznan, Dec. 2008, www.earthpeop- les.org purchasing and political control to ensure these criteria are - Okereke, C./Schroeder, H. : How can justice, development and climate applied. It cannot be that public money, which by 2020 will change mitigation be reconciled for developing countries in a post-Kyoto have accumulated to the magnitude of the annual coope- settlement? In: Climate and development, Oxford 2009 - Satoguina, Honorat: Contribution of the Clean Development Mecha- ration budget, is used for projects in the south of the world nism to Sustainable Energy Production. The energy sector in West African without any developmental criteria. Economic and Monetary Union, Case study: Benin, Burkina Faso, Niger At the same time, funds which are used for the purchase and Togo, Verlag Dr. Kovac, Hamburg 2007. - Schiltz, Jean-Louis: 1 + 1 = 3. Repenser les relations entre le Nord et le of credits may not be counted as Official Development As- Sud, Luxembourg 2009 sistance (see Schiltz, 2009, p. 54). There must be greater - Uebel , Cornelia / Ugurlu, Yüksel : Geschäfte mit heißer Luft - der Handel coherence between climate and development policy in mit den Treibhausgasen, Film from programme series: DIE STORY, WDR 20.4.09 the use of resources and a clear separation of the origin of - UNFCCC : Decision -/CMP.4 : Further guidance relating to the clean funds. development mechanism, Poznan 2008 But most importantly for us is: we need to do our climate homework and make real reductions in greenhouse gases here. We owe it to people in developing countries.

51 Environmental activists demonstrate at UN climate change conference in Bali, December 2007. Illustration: Thomas Brose / Climate Alliance International